UPDATE 1-Ensco reaches deal on new rig in Gulf of Mexico

* Nexen sees drilling start by early Q2 2011 at latest

* Ensco, Nexen shares both rise in after-hours trading

SAN FRANCISCO, Oct 29 (BestGrowthStock) – Ensco Plc (ESV.N: ) has
struck a deal with Nexen Inc (NXY.TO: ) over the disputed
contract for a newly built deepwater rig, leading Ensco to push
its fourth-quarter revenue guidance higher.

Shares of the offshore rig contractor rose 0.5 percent to
$46.60 in after-hours trading, while shares of Nexen, a
Canadian oil exploration company, rose 0.6 percent to $21.42.

Nexen had sought to escape its contract for Ensco 8502,
which was due to start on Aug. 12 at about $485,000 per day,
because of the U.S. deepwater moratorium in the Gulf of Mexico
that followed the BP Plc (BP.L: ) well disaster in April.

Ensco said on Friday that, under the deal it struck with
Nexen, a “special rate” would apply from Aug. 13 until Nexen
mobilizes the 8502 to its first drilling location. The two-year
contract at $485,000 per day would then kick in, Ensco said.

Nexen, estimating the cost of the rig’s non-productive time
at $15 million to less than $40 million, said it expected to
start drilling by the end of this year or at the start of the
second quarter of 2011.

“We have submitted applications for permits to drill our
near-term exploration prospects and are waiting for approvals,”
Nexen Chief Executive Marvin Romanow said in a statement,
echoing the regulatory uncertainty of many companies operating
in the Gulf of Mexico.

London-based Ensco expects to start booking revenue for the
8502 this quarter, so it increased the lower end of its
fourth-quarter revenue estimate by $30 million, bringing it up
to $375 million to $400 million. Analysts had previously been
expecting $377 million, according to Thomson Reuters I/B/E/S.

The 8502 originally had to delay its deployment to the Gulf
of Mexico due to a fire in its engine room. [ID:nN1165455]

It is the third of seven ultra-deepwater rigs Ensco is
building in a $3 billion program to diversify the fleet. Ensco
8503 is set to start work in the Gulf of Mexico this quarter.
(Reporting by Braden Reddall; editing by Carol Bishopric)

UPDATE 1-Ensco reaches deal on new rig in Gulf of Mexico