O&M: Speculation that Saudi Arabia’s reserves may be more limited than previously thought is prompting more drilling. According to Baker Hughes, the oil kingdom is increasing the number of its drilling rigs by 28% to 118 by the end of this year. This could be a reflection that Saudi Arabia is getting uncomfortable with its own spare capacity in light of the Libyan shortfall. Saudi Arabia joins other Mid-East nations, including Kuwait & Iraq, that are adding to their rig counts. Abu Dhabi is planning to add 16 rigs, both onshore & offshore. Rising demand for drilling equipment & oilfield services is likely to improve pricing leverage for oil svcs cos.
Higher oil prices has also prompted Petrobras to revise up its 5-yr capex program & spend up to US$10b to explore & develop deepwater fields it bought from the govt last yr. Petrobras had earlier based its US$224b investment plan for 2010-2014 on an average oil price of US$80/bbl but now believes that the price floor for oil has increased & the trend is for rising prices. This is a boom time for E&P players.