HRT Hires Rig to Drill Offshore Namibia, But Costs Soar

RIO DE JANEIRO - Brazilian oil startup HRT Participacoes em Petroleo SA said Wednesday it has hired a semisubmersible drill rig from Transocean Ltd. to drill prospects off the coast of Namibia, but higher rental rates will push exploration costs in the region higher.

In a filing with stock regulators, HRT said that a final contract would be signed in 15 days. The Transocean Marianas semi-submersible rig will be hired for 280 days, enough time to drill four wells, HRT said.

HRT originally had expected to spend about $70 million to drill its first wells off the shore of Namibia, but those costs are about 25% higher now because oil exploration around the world has increased, said Wagner Peres, chief executive of HRT's HRT America subsidiary.

"When we made the initial estimates, the day rates for drilling rigs were much more favorable," Peres said during a conference call with investors. "Drilling in the Gulf of Mexico was suspended and there was a greater supply of rigs."

Now, the rig market has heated up and the price to rent drilling rigs "has risen substantially," Peres said.

HRT also continues to talk with interested companies about farming out a stake in the 12 offshore Namibia blocks that the company holds a participation in, Chief Executive Marcio Mello said during the call. The process is "ongoing," Mello said, declining to give further details.

Earlier this year, HRT said it had started talks with potential partners to sell a stake in the company's offshore exploration blocks in Namibia. HRT expects to complete the stake sale in the first half of 2012, with more than 20 companies showing interest, Mello told Dow Jones Newswires in an exclusive interview April 17.

HRT's U.S. affiliate, HRT America, opened a data room in Houston after recently completing a three-dimensional seismic survey of the company's holdings off the coast of the West African country. Namibia holds operating stakes in 10 blocks and minority shares in two others in the Walvis, Orange and Namibe basins.

Citigroup Global Markets was hired as a strategic adviser on the sale, also known as a farm-out.