BP’s Gulf Spill to Drive Down Rig Rates, Create Oversupply

BP Plc’s oil spill in the Gulf of Mexico will drive down rental prices for deep-sea drilling vessels by about 20 percent, analysts say, creating an oversupply of rigs as demand slows.

The Deepwater Horizon drilling rig that blew up and sank in April, causing the biggest oil spill in U.S. history, prompted President Barack Obama to ban deep-water drilling for six months. That halted 33 rigs in the Gulf of Mexico and led Statoil ASA, Anadarko Petroleum Corp. and Cobalt International Energy Inc. to declare force majeure, or suspend terms, on their rig hire contracts. Falling prices could pressure companies into making more deals.