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J Storm XVI Is 50th Jackup Commissioned At Bethlehem, Beaumont

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Southern Drilling Company, a wholly owned subsidiary of Marine Drilling Company, and Bethlehem Steel Corporation‘s Beaumont, Texas, shipyard, recently commissioned a 250-foot water depth mobile offshore drilling unit.

The rig was christened J Storm XVI by its sponsor Mrs. Jack K. Larsen, wife of the executive vice president of Mesa Petroleum Company. Senator John G. Tower, senior Senator from Texas, gave the keynote address at the ceremony. The multimillion-dollar rig has been under construction for nearly 10 months and, upon delivery, will begin drilling operations in the Gulf of Mexico for Mesa Petroleum Company.

James C. Storm has been a long-time customer of Bethlehem Steel Corporation’s shipyard at Beaumont.

Sherman C. Perry, general manager of the shipyard, said this commissioning marks a significant milestone in the history of the shipyard. It extends to 50 the number of jackup drilling units commissioned by the Beaumont yard since it built the first 100- foot water depth jackup in 1954. The commissioning also marks the fifth rig to be delivered this year by the yard, as well as the 87th offshore rig delivered by Bethlehem yards.

The J Storm XVI is a mat-supported jackup designed for deepwell drilling operations. On location, the rig will have a total variable drilling load capacity of 4.5 million pounds and handle hook or rotary, plus setback loads of 950,000 pounds.

The rig consists of a platform measuring 176 feet by 109 feet supported by three 12-foot-diameter columns fixed to a mat that is 210 feet by 170 feet. Outfitted with deepwell drilling equipment, the rig can operate in waters of up to 250 feet while experiencing forces resulting from 70-knot winds and 35-foot-high waves. The J Storm XVI contains onboard, air-conditioned living accommodations for 48 persons. This marks the 18th time that one of the 50 Beaumont rigs was commissioned for the James C. Storm interests.

The J Storm XVI is No. 18, and the J Storm XVII No. 19 is scheduled for commissioning and delivery later this year.

Mr. Storm’s dealings with the yard follow a direct line back to 1949. Then in November 1954, the Beaumont yard delivered the Mr. Gus, the first mobile drilling platform capable of operating in 100 feet of water.

Mr. Gus was built for the C.G. Glasscock Drilling Company; Mr. Storm became a partner in that company shortly after he joined it at the close of World War II. In 1957, the Beaumont yard delivered Mr. Gus II, the prototype of the mat-supported jackup rigs built at the yard today. It was the first mobile drilling unit that could drill in up to 150 feet of water. Mr. Storm was involved with that rig also. And Mr. Gus II, after 24 years of service, is still drilling for oil and natural gas. After the Glasscock interests disposed of their drilling rigs, Mr. Storm formed Storm Drilling Company for whom the Beaumont Yard built Stormdrill I, Stormdrill II, Stormdrill III, and Stormdrill IV. Another Storm company, Southern Marine Drilling Company, ordered Stormdrill V. Subsequently Storm Drilling Company was sold.

Mr. Storm then formed Marine Drilling Company and ordered J Storm I from the Beaumont shipyard. J Storm I was initially ordered with capability to operate in 225 feet of water. Mr. Storm asked if the columns could be strengthened and lengthened. The yard added 25 feet of capability, and the rig became the prototype for B e t h l e h e m ‘ s series of 250-foot jackup rigs.

He also ordered the first jackup drilling unit capable of working in up to 375 feet of water. The yard designed this platform to utilize telescoping legs so it would be manageable under tow to different locations, yet be able to work in deeper waters. This rig, J Storm VII, was delivered in 1976. Mr. Perry, general manager of the yard since June 1, 1978, reported that Beaumont has work for the next 1H years. “We have orders for 12 offshore mobile drilling units, which will take us into 1983, and negotiations are being conducted for additional contracts.” The general manager said that the yard has delivered four jackup drilling units thus far this year, and anticipates delivery of four or possibly five more by the end of the year.

That would match or nearly match 1980, when nine drilling units were delivered. For 1978 and 1979, the yard delivered five units each year.

Contracts on hand and the customers are: Marine Drilling Company, one unit in addition to the J Storm XVI; Houtech Energy, Inc., four units; O & U Drilling Co., Inc., one unit; Griffin-Alexander Drilling Co., three units; Teledyne Movible, one unit, and Alfa Drilling, one unit.

The yard presently has more than 2,300 employees at work on the drilling units with two shifts generally being worked, and can accommodate six units under construction simultaneously.

The shipyard’s principal products are offshore mobile drilling units, primarily jackups, and oil and gas production and storage facilities for offshore service. The Beaumont yard has built many ships and barges, principally for the petroleum industry, and can handle any repair, reconditioning, conversion or jumboizing of ships. It has a floating drydock with lifting capacity of 17,500 tons and extreme length of 648 feet. Its mobile floating crane has a capacity of 500 tons.

Source

Offshore Drilling Pioneers – James C. Storm

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Former oilfield roustabout, James Storm became a partner in Glasscock Drilling Company in 1942 and stayed in drilling until his death in 1991. Together with Bethlehem Steel Corp., Storm designed and supervised construction of Mr. Gus and Gus II, the first rigs able to drill in water depths of 100-ft and 150-ft respectively. From 1962 to 1968 he formed Storm Drilling and Marine Drilling.  During this period he developed and patented a slant hole rig to extend lateral reach from a drill site.  Between 1968 and 1987 he built and placed in operation seventeen mobile jack-up rigs.

USA: Hercules Offshore Posts USD 17 Million Loss in 3Q 2011

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Hercules Offshore, Inc. today reported a loss from continuing operations of $17.0 million, or $0.12 per diluted share, on revenue of $163.0 million for the third quarter 2011, compared with a loss from continuing operations of $16.1 million, or $0.14 per diluted share, on revenue of $157.6 million for the third quarter 2010.

John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, “Activity levels in the U.S. Gulf of Mexico Shelf are on the rise, as operators increasingly focus on liquids rich drilling opportunities. Concurrently, several jackup rigs have departed for international opportunities, resulting in a tight environment for rig availability in the region. Hercules Offshore has been the primary beneficiary of the improving fundamental trends in the shallow water U.S. Gulf of Mexico, which have accelerated during the third quarter. Average dayrates in our Domestic Offshore segment have increased by nearly $10,000 per day over the past year, with leading edge rates suggesting further upside for our domestic jackup fleet.

“Our International Offshore segment was recently successful at securing several contracts, including attractive, long term extensions for the Hercules 261 and Hercules 262 in the Middle East. These contracts are a testament to our strong performance and relationship with the customer, Saudi Aramco. Tempering our international success was the recently announced damage to the Hercules 185, where we are anticipating approximately six months of downtime for repairs.”

Offshore

Domestic Offshore revenue increased to $60.2 million in the third quarter 2011 from $25.1 million in the comparable period in 2010. Approximately 70% of the revenue increase is attributable to the acquisition of the Seahawk rigs, while higher utilization and dayrates on the legacy fleet contributed to the remaining revenue growth. Average revenue per rig per day increased by $9,722 per rig per day to $49,060 in the third quarter 2011 compared to $39,338 in the prior year period. Utilization in the third quarter 2011 increased to 74.2% from 62.9% in the third quarter 2010. However, operating days rose by more than 90%, largely as a result of the acquisition of the Seahawk rigs. Domestic Offshore operating expenses increased to $53.2 million in the third quarter 2011 from $38.7 million in the third quarter 2010, due to costs associated with the acquired Seahawk rigs. Domestic Offshore recorded an operating loss of $12.8 million in the third quarter 2011 compared to an operating loss of $32.1 million for the respective prior year quarter.

International Offshore revenue declined to $49.0 million in the third quarter 2011 from $74.4 million in the third quarter 2010. The decline was primarily driven by new contracts at lower market rates on the Hercules 208, Hercules 258, Hercules 260 and Rig 3, as well as the downtime related to transition between contracts. The reduction in revenue related to these aforementioned rigs was partially offset by the increased utilization on the Hercules 185. Overall, average revenue per rig per day declined to $96,388 in the third quarter 2011 from $138,344 in the third quarter 2010, and operating days declined to 508 days from 538 days, in the respective periods. Third quarter 2011 operating expenses were $29.1 million compared to $31.1 million in the third quarter 2010, as lower costs associated with new contract terms on the Hercules 258 and Hercules 260 were partially offset by higher costs on the Hercules 185. International Offshore general and administrative expenses during the third quarter 2011 include an $8.0 million benefit, compared to a $1.5 million benefit during the third quarter 2010, from the reversal of an allowance for doubtful accounts related to payments received from a customer in Angola. Operating income decreased to $12.9 million in the third quarter 2011 from $26.9 million in the third quarter 2010.

Inland

Inland revenue for the third quarter 2011 increased to $8.1 million from $5.7 million in the third quarter 2010, primarily driven by an increase in average revenue per rig per day to $31,008 in the third quarter 2011 from $21,357 in the third quarter 2010. Utilization of 94.9% during the third quarter 2011 is comparable to 97.5% for the prior year period. Third quarter 2011 operating expenses were $3.5 million, which includes approximately $2.6 million in gains for asset sales, compared to $8.3 million in the comparable period in 2010. Year ago results include an accrual of approximately $3.0 million related to a multi-year state sales and use tax audit. Inland recorded operating income of $0.9 million in the third quarter 2011 compared to an operating loss of $8.6 million in the third quarter 2010.

Liftboats

Domestic Liftboats generated revenue of $16.7 million in the third quarter 2011 compared to $24.6 million in the third quarter 2010. Year ago results were positively impacted by coastal remediation work related to the BP-Macondo incident. The absence of the BP-Macondo related work led to a decline in utilization to 69.8% during the third quarter 2011 from 91.6% for the prior year period. Average revenue per liftboat per day was down slightly to $7,443 in the third quarter 2011 compared to $7,684 in the third quarter 2010. Operating expenses were essentially flat at $11.4 million in the third quarter 2011. Operating income for Domestic Liftboats was $0.6 million in the third quarter 2011 compared to operating income of $9.4 million in the comparable prior year period.

International Liftboat revenue increased modestly to $28.9 million in the third quarter 2011 compared to $27.8 million in the third quarter 2010, largely due to higher utilization, which rose to 64.1% in the third quarter 2011 from 56.6% in the prior year period. This was partially offset by a decline in average revenue per liftboat per day to $21,325 from $23,176 in the same periods, respectively. Operating expenses increased to $14.1 million in the third quarter 2011 versus $13.0 million in the prior year period due to higher labor and maintenance costs. Operating income for International Liftboats was $8.5 million in the third quarter 2011, compared to $9.4 million in the same period of the prior year.

Discovery Offshore S.A. Investment

Since Hercules Offshore’s initial $10 million investment in Discovery Offshore S.A. (Oslo Axess: DISC), which gave the company an 8% ownership stake, the Company has completed several purchases of Discovery common stock, totaling approximately $24.2 million. The most recent purchase on September 13, 2011 increased Hercules’ holding in Discovery to 18.4 million shares, corresponding to 28.0% of Discovery’s share capital.

Additional Information

Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 49 jackup rigs, 17 barge rigs, 65 liftboats, two submersible rigs, and one platform rig. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in several key shallow water provinces around the world. Hercules Offshore currently holds 28.0% of share capital in Discovery Offshore, a pure play, ultra-high specification jackup rig company.

Source

FEG Orders Two GustoMSC Design Jack-Up Rigs from CMHI, China

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Chinese yard China Merchants Heavy Industry (CMHI) has recently signed an order for two jack-up rigs with Singapore-listed Falcon Energy Group (FEG) . The order includes options for two repeat rigs.

The rigs are of the GustoMSC CJ46-X100-D design, capable of drilling in a water depth of about 375 ft. Rig construction is expected to take about two years. They will be built at CMHI’s shipyard on Shenzhen’s Mazhou Island.

GustoMSC has signed the license agreement with CMHI and will also deliver the GustoMSC rack and pinion jacking systems, fixation systems and X-Y skidding system for the patented GustoMSC X-Y cantilever.

Special features of the CJ46-X100-D are:

– Drilling derrick: 170 ft, 1500 kips

– Mud pumps: 3 x 2,200 HP

– X-Y cantilever: large reach (70 x 40 ft) high load (2,500 kips)

Source

Bermuda: AOD to Increase Water Depth Capacity for its Jack-ups

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Asia Offshore Drilling Limited (the “Company”) has decided to increase the water depth capacity from 350 feet to 400 feet for its three jack-up rigs under construction. This investment will increase the marketability of the rigs, allowing them to successfully operate in more offshore areas.

The additional capital expenditure to extend the legs is estimated to be below US$ 5 million per rig. These upgrades will have some impact on the delivery schedule of the first two rigs, as the first rig will be delivered in the first calendar quarter of 2013 and the second rig will be delivered by the end of the second calendar quarter of 2013. The delivery of the third rig remains unchanged at the end of the third calendar quarter of 2013.

The Board believes these upgrades will improve the long-term return on investment for the Company’s shareholders. The Company has an option for construction of one more jack-up rig at Keppel FELS that matures on September 30, 2011. The Board has resolved to not exercise this option. Given the prevailing uncertainty and volatility in the financial markets, the Board’s objective is to enhance the quality, marketability and value of the existing rigs rather than incur additional financial  risk by ordering a fourth rig. The decision not to exercise the option will ensure that the Company remains fully financed up to the delivery of the first rig in 2013.

Original Article

High-Spec Jackup Market: Hercules Offshore increases stake in Discovery Offshore

By gCaptain Staff On September 13, 2011

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Hercules Offshore Inc. (HERO) said its acquired an added 6.1 million shares of Discovery Offshore SA (DISC.OS), bringing the contract driller’s stake to 28% in the Luxembourg-based owner of ultra high-specification jackup rigs.

Hercules shares were down 6% at $3.78 in recent trading. The stock is up 60% in the past year.

Houston-based Hercules said it paid an average of 9.02 Norwegian kroner ($1.60) per Discovery Offshore share, bringing its total investment in the company to about $34.1 million.

The company is overseeing construction, marketing and operations of rigs owned by Discovery Offshore, as well as performing other administrative functions.

Hercules President and Chief Executive John T. Rynd said, “Since our initial investment in Discovery Offshore in January 2011, the fundamentals of the offshore drilling industry have strengthened, and demand for ultra high-specification jackup rigs remains exceptionally strong.”

Hercules, which has racked up more than three years of losses, became the biggest rig contractor in the Gulf of Mexico’s shallow waters when it closed on a deal in April to acquire the rigs of weakened rival Seahawk Drilling Inc.

-By Tess Stynes, Dow Jones Newswires

Original Article

USA: Hercules Offshore and Seahawk Drilling Announce Completion of Asset Purchase and Sale

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Hercules Offshore, Inc. and Seahawk Drilling, Inc. announced the completion of the asset purchase and sale previously disclosed on February 11, 2011.

In accordance with the terms of the Asset Purchase Agreement, Hercules Offshore will acquire 20 jackup rigs located in the U.S. Gulf of Mexico and related assets, accounts receivable, cash, accounts payables, and certain contractual rights from Seahawk Drilling.

The total consideration paid to Seahawk Drilling consists of approximately 22.3 million shares of Hercules Offshore common stock and $25.0 million in cash. Following this transaction, there will be a total of approximately 137.2 million outstanding shares of Hercules Offshore, Inc.

Original Article

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