In my preview of Noble Corp's
PEMEX, Mexico's national oil company, sort of gave Noble a prize in the form of a leading-edge dayrate for a three-year deepwater drilling contract. If you follow this market, you've likely heard plenty about the deepwater opportunities in the U.S. Gulf of Mexico, West Africa, and Brazil. There's not a lot of buzz about offshore Mexico, which is fine with Noble's management -- they've been ahead of the curve before, and they may very well maintain that position with their call that Mexico is "the market of the future." PEMEX is going to be Noble's single largest customer in 2007, and this new contract just solidifies the working relationship that ought to give the driller a leg up over competitors in years to come.
Noble's investigation of possible bribery payments in Nigeria is an unfortunate distraction, but I don't think this process merits undue concern. The review seems primarily a precautionary measure in light of Baker Hughes'
Because a significant portion of Noble's fleet are jackups, it's important to keep an eye on the rates earned by newly built rigs of that variety. There are a lot of these shallow water rigs coming online over the next few years, with 75% of them being built on spec, meaning there's no contract attached. The predominant concern is that this rising supply will pressure dayrates. Noble doesn't see the supply/demand balance getting out of whack, thanks to strong international demand. Looking at the desperation to secure rigs in places like Mexico and India, I'm pretty optimistic that rates can hold near present levels for quite some time.
- Here's the bigger picture on Noble.
- Here are the numbers.
- Here's why Mexico is scrambling to develop new fields.