Reminiscent of past days, E&P companies are beginning to assure themselves of rig availability long into the future. The Williams Cos. Inc. subsidiary Williams Production RMT Co. has put in an order for 10 new Helmerich & Payne Inc. FlexRig4s for a minimum of three years and more than $200 million, and Delta Petroleum Corp. has acquired 90% of DHS Drilling Co., forming a drilling subsidiary. Williams will use the new rigs to help develop its acreage in the Piceance Basin in western Colorado. H&P president Hans Helmerich says the order is the largest new-construction and rig-services project for a single customer in the company's 85-year history. The FlexRig4 is designed for 6,000 to 12,000 feet. The first rig is to be ready in November, while the remaining nine rigs are scheduled to be completed at the rate of one every 30 days. Calyon Securities analyst Craig Shere has upgraded Williams' stock from Neutral to Buy. He adds that, while the company's E&P operating guidance had been based on just 12 rigs in this prolific basin, it now sees the average rig count increasing to 20 in 2006 and 22 in 2007. Meanwhile, Delta Petroleum recently purchased all of Edward Mike Davis' ownership in Big Dog Drilling Co. LLC's Rig #2 and Rig #3 in exchange for 100,000 Delta common shares and its interest in Shark Trucking Co. LLC. Delta is contributing the two rigs to DHS in exchange for a 90% interest in the drilling company. DHS also plans to buy Big Dog Drilling Co.'s Rig #1 from Davis and three other rigs with depth ratings of 12,500 feet to 18,000 feet. DHS' fleet will consist of six working rigs. The managers of DHS will include Bill Sauer Jr., Harold Hastings and certain Delta officers. Sauer and Hastings were with Sauer Drilling Co., when it was primarily owned by Tom Brown Inc.
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