WRAPUP 1-Offshore drillers eye Brazil boost for deepwater

Thu Feb 24, 2011 2:02pm EST

* Transocean says 4-8 rigs expected to go to Petrobras

* Petrobras reports Q4 results on Friday

* Situation in Gulf of Mexico improving with court ruling

* Transocean shares down 3 pct on earnings, outlook

* Seadrill, Ensco shares rise

By Braden Reddall

SAN FRANCISCO, Feb 24 (Reuters) - Leading offshore drilling contractors expect deepwater demand to improve this year as an impending hiring move by Petrobras (PETR4.SA) is likely to prompt other oil executives to secure rigs while they can.

Transocean Ltd (RIGN.VX)(RIG.N), the largest offshore drilling contractor, expects a marked improvement in rig demand in the next few months on the belief that Brazil's state oil company will hire between four and eight of them.

"(Petrobras is) very clever about going about their strategy of contracting rigs, and I don't think this will be any different," Terry Bonno, Transocean vice president for rig marketing, said on a call with analysts.

But she later added: "With the expectation that Petrobras will take off some of this supply, I think there has been an improvement in urgency with our other customers."

Petrobras, which reports earnings on Friday, is expected to unveil a revised five-year investment plan in the coming months that will probably increase the $224 billion in spending slated for 2010 to 2014. [ID:nN23297018]

Shares of Transocean, which reported lower-than-expected fourth-quarter earnings late on Wednesday [ID:nN23175440], fell 3 percent on Thursday on a disappointing outlook from the company, including expectations for rising costs in 2011.

Rival Seadrill (SDRL.OL)(SDRL.N) enjoyed a better share performance on Thursday as the company declared a special dividend in anticipation of a good year ahead. [ID:nLDE71M25X]

Seadrill, which has just one deepwater rig in the moribund Gulf of Mexico market while Transocean has a dozen there, posted a 25 percent rise in fourth-quarter operating profit.

Ensco Plc (ESV.N), with three deepwater rigs in the Gulf of Mexico, reported a 36 percent decline in quarterly profit, but said deepwater revenue would rise in 2011 to between $575 million and $625 million from $475 million in 2010.

That does not include any contribution from the company's acquisition of Pride International Inc PDE.N, which will create the world's second-largest offshore fleet once it is completed.

Ensco shares were up 0.7 percent in afternoon trading.

The situation remains uncertain in the Gulf of Mexico, where regulators are still working out how to proceed after last year's drilling disaster, and Transocean said it was in talks to move a deepwater rig out of the region.

But Noble Corp (NE.N), which will be No. 3 in fleet size after the Pride deal, offered a reason for U.S. Gulf optimism. Late on Wednesday, it announced a deal with Royal Dutch Shell Plc (RDSa.L) to keep the Jim Day rig there at an ultimate dayrate of $485,000, plus 15 percent bonus potential.

U.S. regulators will need to start issuing permits first, and a federal judge in New Orleans ruled last week that it must decide on five pending applications by Ensco. [ID:nN17641341]

"We hope this may help to restart permits being issued in the Gulf," Ensco Chief Executive Officer Dan Rabun said on a conference call on Thursday to discuss quarterly earnings.[ID:nN23203845]

Goldman Sachs analyst Daniel Boyd said he expected between 15 and 20 deepwater rigs to be working in the Gulf of Mexico by the fourth quarter, compared with seven now and 34 before the BP (BP.L) well blowout last April. [ID:nL3E7DO25D] (Reporting by Braden Reddall; Editing by Lisa Von Ahn)

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