ConocoPhillips extends contract for Essar’s offshore rig

Amit Mitra Hyderabad | Updated on May 28, 2013 Published on May 28, 2013

Oil and gas explorer ConocoPhillips has extended the contract for deploying Essar’s semi-submersible rig, Wildcat, for drilling off Indonesia till June 2014.

Essar Oilfields Services, a wholly owned subsidiary of Essar Shipping, will now continue to deploy the rig off Indonesia at daily charter rates higher than the average market rates. It had bagged the initial contract for drilling 11 offshore wells for $121 million in September 2011.

“We are getting a daily rate of $285,000 for this asset, which is higher than the market rate,” Ankur Gupta, CEO of Essar Oilfields, told Business Line over telephone from Mumbai.

Bigger opportunities

He sees bigger opportunities in the drilling space, as stable oil prices have been driving growth in the exploration sector. More than 500 offshore rigs are in operation worldwide, with about 90 of these belonging to the Wildcat class — at least 15 of these are deployed in Asia.

The company, which has 14 onshore rigs, is looking at new markets overseas – such as the UAE, Qatar and Iraq - for expansion. Currently, it deploys half of these assets overseas. Increased demand for onshore drilling has nudged up the hire rates for this class of assets. The daily rates range from about $9,000 a day for a 750 HP rig to $40,000 a day for a 2,000 HP rig.

ONGC Contract

Essar has recently contracted for drilling two high pressure, high temperature wells in the onshore KG Basin at the Manepalli field in Andhra Pradesh for ONGC with its 2000 HP rig for about $26,000 a day.

With the trend world over being towards deeper onshore drilling for oil and gas, the company will be looking at foraying into deep and ultra deep drilling next fiscal.

“The asset cost for ultra deep drilling would be $700-750 million, but these can fetch a rate of about $650,000 a day. We will consider buying such assets next fiscal,” Gupta said.

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Published on May 28, 2013
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