This was sent in as a comment by an anonymous visitor to this site and I think it's a great piece of information for other CRUDEDIGGERS. It's curled from Reuters website published on 01-Feb-06. Credits to my anonymous friend who brought it to our notice, happy reading.
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By Ben Berkowitz
NEW YORK (Reuters) - Oil major Chevron Corp. on Wednesday said it awarded a drilling contract to rig operator Transocean Inc. that will lead to the construction of a new deepwater drillship for Chevron's use.
The companies also signed contract extensions for two deepwater drillships currently being used by Chevron. The three deals together are worth $1.7 billion. The Chevron deal came one day after BP Plc gave Transocean a three-year contract extension on a rig worth $569 million.
Analysts said the deals are an acknowledgment that oil companies know they need to become more aggressive in the next few years about deepwater drilling opportunities, in areas that are relatively underexplored.
"The most significant thing of all is the fact that major oil companies indicate by what they're doing that they see a tight rig market, not just medium-term but also long-term," said Stanford Group analyst Philip Dodge said.
"I'm sure everybody is looking at what they need to find over the next few years to keep their production from going down, and one of the top priority places is deepwater," he said.
The contract for the new ship is scheduled to start in the second quarter of 2009, and Chevron will have its exclusive use for five years.
Construction of the ship, set for a Daewoo Shipbuilding & Marine Engineering Cop. Ltd. yard in South Korea, will require a capital expenditure of $650 million.
Chevron exercised a one-year option on the Discoverer Deep Seas starting around January 2008 and signed a two-year extension on the rig starting January 2009. It also signed a two-and-a-half-year extension for the Cajun Express starting July 2007.
The strong demand from oil companies has also pushed dayrates substantially higher -- over the $500,000 per day mark in some cases -- and spurred oil companies to contract out rigs years in advance. "One of these numbers is going to be a peak," Dodge said. "I don't think it's $520,000 (the BP deal), but I'd be surprised if it was over $700,000."
Source/Full Story: REUTERS
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