rigs leaving the gulf

[RACER X]

and so it begins...........

Anadarko declares Force Majeure on 3 of its 4 ultra-deepwater rigs in US GoM while they plan to use the last rig for completion work if MMS allows them. Anadarko has 1 rig each on contract from Noble, Diamond, Ensco and Transocean in the US GoM. No info on what rig they plan to keep, but we would guess the Ensco rig as that is a new-build and this contract would be harder to terminate. The Ensco rig is also the rig working at the lowest day-rate so it makes sense to keep that rig from an economical point of view.

Rigs on contract with Anadarko in US GoM:
Noble Amos Runner (4G 8000 ft from 1982, upgraded in 1999) at 440' USD/Day until March 2011
Ocean Monarch (5G 10000 ft from 1974, upgraded but still moored) at 440' USD/Day until March 2013
Ensco 8500 (5G 8500 ft semi from 2008) at 298' USD/day until June 2013
Discoverer Spirit (Transocean) (10000 ft drillship from 2000) at 520' USD/Day until November 2013

Estimate impact:
Impact on estimates if terminated from September 2010 and no earnings from the rig in 2010 or 2011 (cost down 50% too):
Noble: 2010 and 2011 EPS down 3% and 7% (0.15 and 0.31 USD)
Diamond: 2010 and 2011 EPS down 3 and 9% (0.23 and 0.69 USD)
Transocean: 2010 and 2011 EPS down 1.5% and 5% (0.14 and 0.41 USD)

Impact on estimates if terminated from September 2010 and recontracted at our forecasts:
Noble: 2010 and 2011 EPS down 1% each (0.05 USD)
Diamond: 2010 and 2011 EPS down 1% and 2% (0.05 and 0.17 USD)
Transocean: 2010 and 2011 EPS down 0.5% and 1% (0.03 and 0.11 USD)

Termination?
After X days on Force Majeure contracts can typically be terminated. X is typically in the range 30 to 180 days. Sometimes a termination fee is payable depending on the contract Of the rigs Anadarko has on contract, the only new-build is the Ensco rig and we expect this contract to be hardest to terminate.

Anadarko indicates they will terminate contracts by saying “we will not hesitate to take further action if necessary to protect the company and its financial health”. Force Majeure is said to be step 1.



Meaning of Force Majeure below

http://en.wikipedia.org/wiki/Force_majeure

http://www.calgaryherald.com/news/An...903/story.html

http://www.reuters.com/article/idUSN...pe=marketsNews

http://www.pennenergy.com/index/petr...-declares.html

you think we import a lot of oil now, wait till all the rigs leave the gulf, we'll be importing that % from outside the US now.

so who's driving less? or using less petro based products?