No Dayrate Dip for These Drillers

• Email
• Share
• Print

Last month, we discussed how Mexico has a big oil problem on its hands. Since then, we've learned that the country only replaced 34% of production with new reserve bookings in the first half of this year. Ay, Chihuahua, indeed.

Fortunately, state monopoly Pemex is showing signs of life in a brutal market that's causing even giants like Petrobras (NYSE: PBR) to pause. The national oil company has its eye on both staunching the bleeding at tiring fields like Cantarell, and exploiting new finds like the half-billion-barrel Ayatsil field.

To advance the former effort, Pemex recently tendered for four shallow-water rigs to work at and around Cantarell. This is the standard process by which contractors are invited to bid on new drilling contracts. While one tender found no traction, the other three have been taken up by some of the industry's best.

Considering the tempestuous market environment, these driller deals are rather dreamy.

Ensco International (NYSE: ESV), for instance, is taking on two three-year contracts, to begin early in 2009, for a total take of $367 million. That's more than $167,000 a day per contract, on average, which is right in line with the firm's only other rig active in that market. The length of these contracts is really the standout.

Noble (NYSE: NE) pulled the opposite feat, with a more moderate term of a year and change, but a knockout dayrate. At more than $200,000 per day, this rate handily beats every other one that Noble's jackups have going in Mexico -- and Noble has 10 in this market!

These contract signings, however, don't prove that 2009 will be smooth sailing for folks like Noble, Atwood Oceanics (NYSE: ATW), and Rowan Industries (NYSE: RDC). A lot of newbuild jackups are poised to hit the water, and the fresh supply may be enough to shock rates significantly lower. So far, though, the impact isn't evident.

Related Foolishness:

• Noble's still seaworthy.
• Ensco sees a disconnect in the drilling market.
• This contractor continues to tower above all the rest.