ERHC Energy Inc (ERHE)

[Bigfish]

Looks like a ray of hope for an ROO if any of the idle Aban Offshore rigs are deep water.


Ajit Motwani, an analyst with Mumbai-based brokerage Emkay Share, said the repayment of debt could be an issue if more rigs (two of the 20 are hired and the rest Aban’s own) are unable to get contracts. That is possible, with contracts for five more rigs getting over in the next six months.

According to industry estimates, exploration and production are likely to decline globally by 12 per cent, to $400 billion in 2009 from $454 billion in 2008. This would lead to lower day rates for jack-up rigs (16 of Aban’s 20 are of this type), as oil producers renegotiate the rate with service providers.

J M Financial, a Mumbai-based brokerage, has estimated an addition of over 100 new offshore drilling assets across the world over the next three years, with day rates expected to decline by 50-60 per cent. Jack up rigs are currently earning average daily rates of $1,50,000-1,60,000.