UPDATE 3-Noble moves US Gulf rig to Brazil, more may follow

Thu Jan 27, 2011 4:35pm EST

Related Topics

* Clyde Boudreaux to earn $290,000/day, less than before

* Joins other major U.S. Gulf contractors by moving rig

* Noble shares down 1.5 pct, rival Diamond down 2.7 pct (Adds drilling market outlook, background, share price close)

By Braden Reddall

SAN FRANCISCO, Jan 27 (Reuters) - Noble Corp (NE.N), the world's second-largest offshore rig contractor, is moving one of its deepwater rigs out of the Gulf of Mexico, and said it expected more would follow.

Noble has a letter of intent with Royal Dutch Shell Plc (RDSa.L) to move the Clyde Boudreaux to Brazil for a year at a rate of $290,000 per day, starting in April, according to Roger Hunt, Noble's senior vice president for marketing and contracts.

"We expect to see additional units leave the Gulf region, which may at some point impact the broader deepwater market," Hunt told analysts on a conference call on Thursday. "However, the global deepwater segment has so far continued to be relatively stable."

Concerns about the low rate for such a high-end rig helped trim 1.5 percent off Noble shares. Shares of Diamond Offshore Drilling Inc (DO.N), which has nearly half of its 32 older deepwater rigs working off Brazil, fell 2.7 percent.

Contractors announced plans for a dozen new deepwater rigs over the past few months, based on their belief that demand for deepwater rigs will take off in the next few years, but they will first have to get through a tough 2011. [ID:nN19220450]

Noble is the last major Gulf of Mexico drilling contractor to move out a rig because of the shortage of well permits following the U.S. regulatory overhaul in response to the BP Plc (BP.L) oil spill disaster last year.

Previously, Noble had negotiated with clients to keep rigs in the region at cut rates in the hopes of quickly returning them to work. (FACTBOX on rigs moved so far: [ID:nN27265554]

The Boudreaux had been on a standby contract with Noble Energy Inc (NBL.N), an operator unaffiliated to Noble Corp that opted not to extend its contract.[ID:nN17246413]

The rig had been due to earn a dayrate of $397,500 with Noble Energy once it started working again.

Noble shares fell 1.5 percent on Thursday to $37.30, despite reporting better-than-expected profits.[ID:nN26218993]

Dahlman & Rose's Omar Nokta called the Boudreaux's new rate "much weaker than expected," with dayrates for such units ranging from $350,000 to $400,000.

"Clearly we wanted it out of the Gulf of Mexico," Noble Chief Executive David Williams said when asked about the rate.

The Jim Day is another Noble ultra-deepwater rig out of work in the Gulf after Marathon Oil Corp (MRO.N) canceled its four-year, $752 million contract this month. [ID:nN03193046]

The recently rebuilt Jim Day was drawing plenty of interest among operators, both in the Gulf and elsewhere, Hunt said.

Another Noble floating rig that works in shallower depths, the Paul Romano, will be available later this year, and Hunt was looking at opportunities for it, mostly outside the Gulf. (Reporting by Braden Reddall. Editing by Derek Caney, Bernard Orr and Robert MacMillan)

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