NEW YORK (Dow Jones Newswires), Jan. 22, 2009
The offshore drilling sector is certain to see assets or whole companies sold off in 2009, the chief executive of Noble Corp. (NE), a large rig operator, said Thursday.
Low oil prices are likely to put pressure on newer rig owners, which will provide opportunities to expand for drillers with free cash, including Noble, said CEO David Williams in a conference call.
"If oil stays in the $30s it's going to get tough for some of these guys out there," Williams said. "We should have a chance to grow the fleet."
Rigs capable of drilling in deep water were in high demand through late 2008, with producers sitting on major offshore oil fields desperate to find equipment to develop them. Several new companies formed to build rigs, assuming that they could charge high rates to producers.
When oil prices crashed, so did the speculative rig builders' prospects. Some firms are also having problems raising the cash to finish rigs under construction, due to the tight credit market. Those partially completed rigs, as well as others that were ordered but never built, will need to be sold off, Williams said.
"The odds of an asset sale in 2009 to somebody are 100%," Williams said. "There are enough people who are in a bind that I just find it inconceivable (that) we go all of 2009 and something not be sold to somebody."
Copyright (c) 2008 Dow Jones & Company, Inc.
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