How much do Exxon and OMV Petrom pay for their Black Sea deepwater drilling

Exploration conducted by US group Exxon and Romania’s OMV Petrom in the deepwater sector of the Neptun block, in the Romanian Black Sea section, comes at a high price. One day of deepwater drilling costs USD 505,000, according to official data. Exxon and OMV Petrom announced they will start drilling a new well in the Neptun block, Domino 2, to further assess the potential of the gas deposit they found at the beginning of 2012 after the drilling of the first well, Domino 1. The two companies commissioned the Ocean Endeavor rig to drill the well, which will be located approximately 200 kilometers from shore in 800 meters-deep water. The Ocean Endeavor rig is owned by American company Diamond Offshore, headquartered in Houston, Texas. According to Diamond Offshore data, the Ocean Endeavour rig was commissioned by ExxonMobil for an 18-month term (June 2014 to December 2015), for a daily rate of USD 505,000. If the rig were to work for the whole 18 months period, Exxon and OMV Petrom would have to pay USD 276 million. Adding the 6.6 percent bonus mentioned in the contract, the whole operation could go up to as much as USD 294 million. Exxon also reserved the option to use the rig for three more years after the current contract expires, in December 2015. Ocean Endeavor is a deep water rig that can drill to depths of up to 10,000 meters. The rig is a semisubmersible one. This means that the working deck sits atop giant pontoons and hollow columns. At the drill site, the crew pumps seawater into the pontoons and columns to partially submerge the rig, hence the name semisubmersible. With much of its bulk below the water's surface, the semisubmersible becomes a stable platform for drilling, moving only slightly with wind and currents. These rigs work full time, seven days a week. They come with the necessary crew to operate them. Diamond Offshore says its international crews typically work a rotational schedule of 28 days on and 28 days off. The Domino 2 is the second deepwater well that’s being drilled in Romania’s Black Sea section. The first one was Domino 1, at the beginning of 2012. The Domino 1 well was drilled by Deepwater Champion, a drillship owned by Transocean. The daily rate for this drill ship is even higher. According to public data, Exxon and OMV Petrom paid some USD 655,000 per day for the drilling of Domino 1 at the beginning of 2012. The Domino-1 well resulted in the largest discovery of natural gas in Romania in the last two decades. The preliminary estimates, announced at the beginning of 2012, showed an accumulation ranging from 42 to 84 billion cubic meters of gas. At the current market prices for Romanian gas, the estimated value of this deposit would be between USD 8 billion and USD 16 billion. Andrei Chirileasa, andrei@romania-insider.com