marc, From the Rowan Cos SEC 10-K report filed a month or so ago, here is a nice description of: (1) a jackup rig; (2) a semi-submersible rig; and (3) elements that go into negotiating a drilling contract...
"Jack-ups are utilized for both offshore exploratory and development drilling and, in certain areas, for well workover operations. The Company operates larger deep-water type jack-up rigs capable of drilling to depths of 20,000 to 30,000 feet in maximum water depths ranging from 225 to 450 feet, depending on the size of the rig and its location. A jack-up rig is a floating hull with three independent elevating legs and drilling equipment, which is comprised of engines, drawworks or hoist, derrick, pumps to circulate the drilling fluid, drill pipe and drilling bits, along with supplies, crew quarters, loading and unloading facilities, helicopter landing deck and other related equipment. The Company's rigs are equipped with propulsion thrusters to assist in towing. At the drilling site, the legs are lowered until they penetrate the ocean floor, and the platform hull is jacked up on the legs to the desired elevation above the water. The platform hull then serves as a drilling platform until the well is completed and the operation is reversed by lowering the platform hull into the water and towing it to the next drilling site. The cantilever feature contained on the Company's newer jack-ups provides for the extension of the portion of the drilling platform containing the drilling rig over fixed production platforms so that the drilling rig may be utilized to perform development or workover operations on the platforms with a minimum of interruption to production.
The Company's semi-submersible rig is utilized principally for offshore
exploratory drilling from a floating position and is capable of drilling to a
depth of 25,000 feet in water depths up to 1,200 feet. A semi-submersible drilling rig consists of a drilling platform raised above multiple hulls by columns. The hulls are flooded so as to be submerged beneath the surface, in which position the rig is anchored during drilling operations. The same type of equipment which is contained on a jack-up rig is mounted on the drilling platform. After completion of the well, the submerged hull is deballasted to reduce vessel draft and facilitate towing to another drilling location.
Onshore Operations
The Company has drilling equipment, personnel and camps available on a contract basis for exploration and development of onshore areas. It currently owns 14 deep-well land rigs located as follows: two in Oklahoma, two in Texas, six in Louisiana, and four in Alaska, which are winterized. Three trailer-mounted land rigs, along with the Company's Argentina subsidiary, were sold in late-1996.
Four deep-well land rigs have worked fairly consistently in Texas, Mississippi and Louisiana since mid-1994 and one other rig was reactivated during the third quarter of 1997. Two other deep-well land rigs were returned from Argentina during the second quarter of 1997 and worked most of the rest of the year in Louisiana and Texas. The Company is currently completing the reactivation of two additional rigs in Texas and Oklahoma. The Company's five remaining deep-well
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land rigs based in Alaska and Oklahoma have been idle since mid-1988 due to inadequate rates, and remain "mothballed" at March 27, 1998. The cost of maintaining these rigs is modest and the remaining investment in the rigs is not significant.
The drilling equipment comprising an onshore rig consists basically of engines, drawworks or hoist, derrick, pumps to circulate the drilling fluid, drill pipe and drilling bits. The type of rig required by a customer depends upon the anticipated well depth, terrain and conditions in the drilling area.
Contracts
The Company's policy with regard to day rates and contract durations depends upon the prevailing strength or weakness of the market. During periods when the offshore rig markets are weak and declining rates prevail, the Company generally pursues a policy of entering into lower rate contracts to remain in a competitive position and to offset the substantial cost of maintaining and reactivating stacked rigs. During those times when the markets are strong and increasing rates prevail, the Company's policy is generally one of negotiating short rather than long-term contracts for its offshore rigs because such policy allows the Company to maximize its ability to obtain the benefit of rate increases and to pass through cost increases to customers.
Drilling contracts presently being sought by the Company are those which provide for drilling compensation on a day rate basis, such contracts being obtained either through competitive bidding or individual negotiations. Rates obtained depend upon the type of equipment used, its availability and its location, as well as the type of operations involved. Both offshore and onshore contracts for use of the Company's drilling equipment are "well-to-well", "multiple well" or for a fixed term generally ranging from four to twelve months. Well-to-well contracts are cancelable at the option of either party upon completion of drilling at any one site, and fixed-term contracts customarily provide for termination by either party if drilling operations are suspended for extended periods by events of force majeure. While most current fixed-term contracts are for relatively short periods, some fixed-term and well-to-well contracts continue for a longer period than the original term or for a specific series ofwells. Contracts, particularly those for offshore operations, generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to the Company and the customer and, in many cases, provide for additional payments for mobilization and demobilization. Contracts for work in foreign countries generally provide for payment in United States dollars except for minimal amounts required to meet local expenses. |
