According to Barclays, global spending on oil exploration and production is expected to rise from $604 billion in the previous year, to around $644 billion in the current year. This will be driven by an upsurge in the capex of the oil companies, that are expected to increase by 9% this year. Global rig delivery in 2013 is estimated to be around 62, which was just 33 in the previous year. Looking at the increased spending on exploration and production activities, the investors can anticipate further growth in the revenues, for the oil-drilling contractors.
I have screened three such companies in this article. Let’s investigate how they plan to maximize their performance with the increase in oil exploration activities.
Capitalizing in the U.S. and Brazil
Noble Corporation (NYSE:NE). is a leading offshore drilling contractor, and it is planning increases to its offshore drilling and deepwater drilling operations in the Gulf of Mexico. The company is relying upon the Gulf of Mexico for its growth, as this region is a prime focus for U.S. oil producers. Recently Noble Corporation (NYSE:NE) signed a three-year contract with Plains Exploration & Production Company (NYSE:PXP) for two ultra-deep water drills in the Gulf of Mexico. This contract is expected to generate revenue of around $693 million per rig for the company over three years. Noble Corporation (NYSE:NE) currently operates eight rigs in the Gulf of Mexico, and the continued addition of rigs will further increase the revenue of the company.
To achieve self-sufficiency in oil and gas, Brazil intends to double its oil and gas production by the end of 2020. Noble Corporation (NYSE:NE) increased its operations in Brazil in the first quarter of 2013 to take advantage of this opportunity. It operates nine rigs in this region. The company’s revenue increased by 2%, year-over-year, in the first quarter of 2013. This increase is attributed to improved operations of its semi-submersible rig, the Noble Corporation (NYSE:NE) Max Smith, in Brazil. Additionally, Noble Corporation (NYSE:NE) is contracted to provide drilling and exploration facilities in Brazil to Petroleo Brasileiro Petrobras SA (NYSE:PBR). The contract has potential revenue of around $4 billion and is expected to continue until 2017. Due to strong growth opportunities in Brazil, company revenue will continue to increase.
New contracts and technology upgrades
provides drilling services to the oil and gas exploration companies.Its contract with Murphy Oil Corporation (NYSE:MUR) was extended for another two years at a day rate of $465,000. In the previous contract, Diamond Offshore Drilling, Inc. (NYSE:DO) was receiving $305,000 per day, 35% less than the new contract. Recently, it also signed a three-year contract with British Petroleum for initial usage of its rigs in South Australia, for the day rate of $585,000, and further rise is expected, to offset increasing operating costs. Looking at the contracts of the company, , there will be a rise in total revenue to $4.33 billion in the current year, from $3.54 billion in 2012.
Due to increasing demand of crude oil, the company plans to upgrade and add new rigs to its fleet. In May 2013 it awarded a new $755 million contract to Hyundai Heavy Industries for the construction of semi submersible rig “Moss CS60E”, which will work in harsh environmental conditions. The rig is slated for delivery in 2015. The company is expecting to invest around $1.75 billion for the upgrade and construction of new rigs this year. In the event of higher expenditure, it has revolving credit of around $750 million which can be used until 2017. Through new construction and upgrades, the company will remain competitive, and it will aid in increasing its market share.
