Rowan to head for deeper water this year


Rowan to head for deeper water this year


HOUSTON -- Shallow water driller Rowan Drilling is stepping in the deepwater, a move that it expects will boost profits and make it a long-term player in the hottest oil fields in the world. Rowan will get its first four ultra-deepwater drillships later this year, with at least three more to come in 2014 and 2015.

In a way, timing couldn't be better,drilling companies can't bring new deepwater vessels online fast enough, and the cost of renting one has shot up to nearly $700,000 a day off the west coast of Africa and can run as much as $650,000 in the Gulf of Mexico. But the company is also delving in an area that is dominated by long-established players that are also building scores of new drillships.

Rowan's transformation, which has taken years, underscores the allure of giant deepwater discoveries around the world. All that activity is prompting a major fleet upgrade in the offshore drilling industry, with about 100 floating rigs equivalent to about 30% of the existing global fleet already ordered and more to come, Barclays analyst James West said. There's more areas that are opening up every day for deepwater. Barclays estimates the four ultra-deepwater rigs will account for 30% to 40% of Rowan's net income when they are all operational, Mr. West said. Until now, Rowan's offshore operations have been in shallower waters with a fleet of high-end jackup rigs.The company has invested nearly $2.7 billion in the four ultra-deepwater drillships, each of which can drill in depths of up to 12,000 ft.

And Rowan will be the new kid on the block, with rival companies more established in deepwater also building fleets of new deepwater and ultra-deepwater vessels. These companies have stronger relationships with operators and more options if they are unable to secure contracts for new rigs. A group of smaller up and coming offshore drillers, including Atwood Oceanics and Vantage Drilling, is also hoping to make waves with ambitious new programs.

Dow Jones Newswires

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