Gulf of Mexico rig activity up, international lags

Demand for jack up and semisubmersible rigs has improved in the Gulf of Mexico following a decline in activity earlier this year. International drilling activity, however, has shown slight declines in several regions. Relatively firm natural gas prices have helped buoy rig activity in North America. Rig day rates have not followed suit, mainly because of the influx of rigs from weaker international markets. Day rates in the US may not increase until international activity picks up and the world-wide drilling market tightens. Oil prices have hit almost $20/bbl, mainly because of the recent oil worker' strike in Nigeria and good demand. Natural gas prices in the US have hovered around $2.00/MMBTU, and many industry analysts expect gas prices to remain strong over the next few years. This paper gives data on drilling rig counts and crude oil and gas prices in the Gulf of Mexico and onshore