Service vessel utilization in the Gulf of Mexico was up slightly in October along with day rates in all categories except large OSVs. That’s the good news.
The bad news is that U.S. Gulf rig utilization continues to decrease, falling to 71.5 percent at the end of October. The drop is a result of the loss of four more rigs, from 122 the previous week to 118 on Oct. 30.
Numerous analysts and industry insiders continue to speak of the apparent disconnect between commodity prices and offshore rig activity.
In a recent report, Marshall Adkins with Raymond James & Associates in Houston noted that the Baker Hughes rig count (land and offshore rigs) has increased more than 30 percent since the beginning of this year. He also noted that, as a result of pre-drilling indicators, drilling activity should continue to improve for the remainder of this year and into 2004.
This is all good news if you own land rigs. But there still is a disconnect between commodity prices and rig activity in the offshore market.
As mentioned last month, drilling permits filed for offshore exploration and development work in the Gulf of Mexico are down 16 percent.
Is there hope?
Jordan Horoschak, an oil services analyst with CIBC World Markets in Houston, said in a recent report that day rates have begun to improve for premium jackups in the Gulf.
He cited ENSCO International, which has maintained its effective utilization of premium jackups at above 90 percent while posting a 15 percent jump in day rates.
“It has taken a long time for the surge in U.S. land drilling to spill over to the offshore segment,” Horoschak said in the report, “but we think it has finally started to arrive, albeit slowly.”