Rowan targeting 11 Saudi rig opportunities

Shallow-water oil rig contractor Rowan Cos Inc is bidding on 11 drilling opportunities in Saudi Arabia, Chief Executive Matt Ralls said, as the world's top oil exporter seeks to expand its drilling. Saudi Arabia aims to increase the number of rigs it operates by 30 per cent, an analyst wrote earlier on Monday, giving a lift to the shares of leading oilfield services companies.

In an interview late on Monday, Ralls said Rowan has three jackups in Saudi Arabia coming off contract in the next few months. "We are optimistic that they're going to keep those, but we don't know that yet," Ralls told Reuters on the sidelines of the Howard Weil Energy Conference in New Orleans.

By the end of this year, Rowan will have 31 jackup drilling rigs, including 19 considered 'high-specification'. Ralls said Rowan had spent somewhere around $3 billion in the last three years on adding the latest jackups to its fleet, and its rivals were now playing 'catch-up' with plans for 17 new shallow-water rigs coming on to the market by 2014.

"Operators are demanding more and more of the equipment, and the highest capability rigs in each market segment are getting the jobs," he said. "Where we have missed an opportunity is we never expanded into ultra-deepwater, so we're playing catch-up to the rest of the field in that regard."

Analysts see Houston-based Rowan as an attractive takeover target given that it already owns 19 high-specification jackups, and deals are anticipated among rig owners following Ensco Plc's deal for Pride International to create the world's second-largest driller.

Ralls reiterated that Rowan would at least consider, as part of any deal with another company, the potential to move its corporate home outside the United States as rivals Transocean Ltd and Noble Corp have done to save on taxes.

But he added: "That's icing on the cake, that doesn't drive a strategic transaction." Ralls also said any deal or investment in new deepwater rigs would not necessarily have to come after Rowan's much-discussed separation of its land-rig business, which he said would likely be for cash, or its LeTourneau manufacturing arm, which could even be spun out to Rowan shareholders.

"Those issues are separate but related. The outcome in one can influence the other, but we do not need to sell anything in order to continue to pursue our building strategy," he said.

"Having said that, we do think it's more likely that we'll see transactions for at least one of those this year."