Rig owner Hercules Offshore has confirmed it is considering entering into a fee-based management contract to operate two new 400-foot, high specification and harsh environment jack-up rigs for delivery in 2013.

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Anthony Guegel  12 January 2011 21:05 GMT

Subject to negotiation of contractual terms, Hercules would also invest up to $10 million in cash but would not incur any debt or further financial obligations. The other party was not named.

The Houston-based contractor said in a filing today to the US Securities and Exchange Commission that it is “currently considering alternatives” for a “fee-based management contract to market, manage, crew and operate” the jack-ups.

The units would be built in a fabrication yard in Singapore, possibly Keppel Fels or Jurong Shipyard.

Hercules cautioned, however, that there are no “assurances” that the negotiations for the management contract would be successful.

Hercules has been struggling to get more jack-up rigs back to work in the Gulf of Mexico.

Out of 25 jack-ups deployed in the US Gulf, 14 remain cold-stacked.

Published: 12 January 2011 21:05 GMT  | Last updated: 12 January 2011 21:11 GMT // upstream news //

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Pivot: 11.25 Our preference: Long positions above 11.25 with targets @ 12.3 & 12.43 in extension.

Alternative scenario: Below 11.25 look for further downside with 11.06 & 10.86 as targets.

Comment: the RSI calls for a new up leg.

Key levels12.86 12.43 12.3 11.6 last 11.25 11.06 10.86

// TRADING CENTRAL is a commentary service specialising in technical analysis. //

KepCorp  ->    <- SembCorp

hehehhehee....

With crude at its highest price in two years, overproduction allows OPEC members to boost profits without formally changing output targets.

An extra 1.934 mmbd at $80 works out to a nice “informal” $56.47 billion boost.

OPEC's been lying... That's nothing new.

What's important here is to note the willingness to extract as much as they can as prices rise.

Analysts, start your engines

If the price of oil creeps high enough, OPEC will officially raise its target to cash in.

$100 seems to be the obvious trigger to make that happen, and the consensus is that it will happen this year.

Oil's at $91.43 as I write this — up 30% from the year's low.

Goldman says it'll “average $100 in 2010 and $110 in 2012.” JPMorgan says we'll see $120 by the end of 2012.

Adding to the pricing fire, U.S. stockpiles declined by 19 million barrels this month thanks to intense cold and holiday travel. That's the biggest monthly decrease since December 2006.

I'm sure you've noticed gas station marquee numbers are back on the march.

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Call it like you see it,

Nick

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Publisher, Wealth Daily