) is contemplating ordering additional Category D semi-submersible
rigs for operations off Norway. The rigs will be specifically
designed according to its needs and help counter the lack of
capacity as well as escalating costs.
SCHLUMBERGER LT (SLB): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
To read this article on Zacks.com click here.
Since July 2011, Statoil has placed order for four new customized
semi-submersible rigs, scheduled for delivery in 2014 and 2015.
Each rig is likely to cost $570 million and has been chartered for
eight-years. Statoil further holds four three-year options for the
rigs. The newbuilds are likely to fetch dayrates in the range of
$415,000 - $448,000.
Per the government-commissioned report issued in August 2012,
drilling costs in Norway have climbed twice over between 2000 and
2010 and is currently about 45% higher than in the neighboring U.K.
The report also mentioned that Norway can tackle this issue only if
it simplifies rules for offshore rigs and lower labor costs. It can
also be done by encouraging means of enhancing oil yield, which has
reduced by more than 50% in the last ten years.
Statoil stated that the rigs required for operating in the rough
region of Norway - having stringent regulations - needs to be
equipped with advanced technology and safety equipments.
However, the rising demand for such rigs in Norway will be faced
with a capacity crunch. Of the 17 midwater rigs operational in
Norway by the end of 2012, only 5 units are likely to be available
Although several deep-water units are under construction and
scheduled for delivery over the next few years, these are not
considered to be feasible for midwater work as their higher
technalities make them more expensive to function. These have led
to a rise in dayrates for many of the older Norwegian rigs.
Thus, Statoil may choose to implement an ownership model on any
future Category-D orders, under which the rigs would be held within
the license partnership, in line with the strategy already adopted
for newbuild Category J jack-ups for which construction and
management contracts are expected to be awarded later in 2012.
Statoil, which recently contracted
) for electric wireline logging services on the NCS, holds a Zacks
#2 Rank (short-term Buy rating). Longer term, we maintain our