Global Marine Inc. Chief Executive Bob Rose expects
daily rental rates, or dayrates, for offshore oil and gas drilling rigs to surpass their highs of three years ago in 2001. "We will see rates exceed the 1997-98 high levels. That will very definitely be this year," Rose said.
Dayrates are currently running at about 74 percent of their 1997/98 highs, Rose said, with the West African and North Sea markets now showing signs of recovery as a longer-established natural gas drilling boom continues in the U.S. Gulf of Mexico
. Rose said that as a result of a recent expansion of its fleet of rigs, Global Marine was capable of annual earnings per share of about $3.25 if market conditions matched those of 1997.
He declined to comment on Thomson Financial/First Call consensus estimates for Global Marine's earnings per share of $1.43 for 2001 and $2.18 for 2002. Last year, the company earned 64 cents per share.
Global Marine's Vice President of Investor Relations Michael Dawson welcomed energy proposals unveiled by President George W. Bush on Thursday saying they seemed to strike a balance between conservation and increasing supplies.
Dawson said proposed incentives for offshore oil and gas exploration were "a plus" but were unlikely to have much immediate impact on Global Marine, which he noted was already benefiting from a cyclical upswing in offshore drilling.
Rose said Global Marine is currently limiting the length of new contracts that it signs for its rigs so that it can benefit from the further increases in dayrates that it expects.
The average dayrate for the company's rigs was $71,100 during the first quarter of 2001, up from $52,000 in the same period of 2000. The fleet utilization rate reached 100 percent last month for the first time since July 1988.
Rose said he expects some drilling rigs to be moved from the U.S. Gulf of Mexico to other markets this year, as international dayrates catch up with and overtake domestic rates.
"There is a shortage of rigs in West Africa, so therefore you will see rigs migrate to that market," he said.
Rose said he also expects rigs to be moved from the Gulf of Mexico to the North Sea, saying that market and West Africa are both improving "tremendously."
Global Marine is willing to move its own rigs, but only if oil and gas companies meet the expenses incurred, he said.
Rose said global oil markets were currently more firmly underpinned than they were in late 1997 -- when prices peaked before starting a steep decline -- because, unlike then, there is currently very little unused production capacity.
The little spare capacity now available is held by Saudi Arabia, the United Arab Emirates, and Iraq, all of whom back OPEC's policy of limiting supply to support prices, thus reducing the chance of cheating on OPEC production quotas, he said.
Rose said demand for drilling services should remain strong in the coming years because the world would need 44 million barrels per day of new production by 2010, based on fairly cautious assumptions of demand growth of 1.5 percent and a depletion rate for existing oilfields of 6 percent. - (Reuters)