=DJ Transocean CEO: Tight Deepwater Rig Supply Foreseen >RIG
--------------------------------------------------------------------------------
Dow Jones Real-Time News for InvestorsSM
10:54 a.m. 02/20/2008
By Brian Baskin
Of DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--Demand for deepwater drilling rigs will exceed supply for the foreseeable future, Transocean Inc. (RIG) Chief Executive Bob Long said Wednesday.
"The deepwater market will remain supply-constrained for a long time," he said during a conference call, adding that clients are beginning to ask about hiring rigs into the middle of the next decade.
Many of the largest oil and gas discoveries this decade have come offshore, often in waters 7,000 feet deep or more. Nearly all deepwater rigs are actively drilling, causing prices, known as day rates, to skyrocket. Deepwater drillers are still seeing strong growth in revenue and profits, even as other service companies warn of a slowdown in 2008. Although drillers will complete 160 new rigs by 2011, Transocean and its competitors see little sign of outstripping demand.
In 2008, Transocean sees prices for its most advanced rigs increasing 9.4% to $371,000 a day. Shallow-water rigs, known as jackups, will see a more modest increase of 4.7%, to $155,000 a day.
Transocean, long the biggest deepwater operator, became owner of one of the largest jackup fleets after it completed its acquisition of rival GlobalSantaFe in November. On Friday, the company said it would sell three jackups in the Gulf of Mexico to Hercules Offshore Inc. (HERO), marking Transocean's exit from the region.
Long said Transocean is not abandoning the jackups, but will leave certain "niche" markets in order "to focus the company on the higher end of the market." The Gulf of Mexico, once home to one of the world's largest jackup fleets, has become something of a backwater in recent years, as the amount of oil and gas taken from shallow U.S. waters has fallen.
Transocean shares recently rose 4.1%, or $5.33, to $135.
-By Brian Baskin, Dow Jones Newswires; 713-547-9202; brian.baskin@dowjones.com
Market Data 
Markets 
AI
