A Pair of Oil Patch Disappointments

As Canadian icon Bryan Adams once said, "You win some and you lose some." On Friday, Plains Exploration & Production (NYSE:PXP) lost some. And by "some," I mean drilling access off the coast of Santa Barbara, California.

While Canada has since hosted an oil spill more than 10 times as severe as the one that tarred the coast of Santa Barbara back in 1969, the latter spill is credited by some as having sparked the environmental movement in this country. The proximity to California's coastline really magnified the impact of this particular accident.

Since the 1970s, California's coastal waters have barely seen the business end of a drilling rig. It wasn't until last August that Santa Barbara County supervisors began to soften in their anti-drilling stance. Since then, the Sarah Palin school of thought on domestic drilling has lost a lot of its luster, and that reversal in sentiment culminated in a vote by the California State assembly to reject the assignment of a new drilling lease to Plains.

Plains may get to tap the state's offshore treasures at some point for the future, but for now the biggest finds in California are limited to onshore areas such as the San Joaquin basin, where Occidental Petroleum (NYSE:OXY) just made the state's biggest discovery in decades.

Another offshore disappointment relates to a recent contract signing between mid-size independent Noble Energy (NYSE:NBL) and driller-for-hire Pride International (NYSE:PDE).

Pride's South Pacific, a deepwater semi-submersible currently configured to operate in up to 5,000 feet of water, is taking a major price cut on this year-long assignment compared to its current engagement for Murphy Oil (NYSE:MUR) offshore Congo. Granted, the Congo stint only lasts a few short months, but the drop from $650,000 per day still represents more than a 50% decline.

Following the revelation of an over-corroded hull that led to the early cancellation of a drilling contract with Chevron, this is another bummer for the deepwater B-lister. Transocean (NYSE:RIG), meanwhile, recently signed a comely three-year contract with Petrobras (NYSE:PBR) at roughly $500,000 per day. I wouldn't take Pride's dayrate dip as a loss of bargaining power across the board.