BP (NYSE:BP) Close to Launching Offshore Drilling in Libya

Citing the desire of the company to be extra careful after the oil spill in the Gulf of Mexico, along with changing the oil rig they were going to use, BP (NYSE:BP) spokesman Robert Wine said the company is readying itself to begin offshore drilling off the coast of Libya in June; a little later than anticipated.

Wine noted, "We postponed it to do extra checks following the oil spill and also the rig we had lined up we decided wasn't suitable, so we've got another rig.

"Onshore, we've got a rig in place and they are getting ready, so that should get under way shortly."

Originally the company had had plans in place to launch offshore drilling in Libya in 2010.

As to the changing of oil rigs, BP was going to use a rig from Noble Corp. (NYSE:NE), but decided to go with the Deep Ocean Ascension from Pride International Inc (NYSE:PDE) instead.

Pride International (NYSE:PDE) Soars on Ensco (NYSE:ESV) Acquisition

On the announcement that Ensco (NYSE:ESV) was going to acquire Pride International (NYSE:PDE) for $7.3 billion, shares of Pride surged by over 16 percent on the news, although Ensco pulled back.

Once the deal is completed the new company will be the second-largest off-shore drilling company in the world, valued at over $16 billion. The combined company will include 74 rigs.

Ensco Chief Executive Officer Dan Rabun said in a statement, "The combination is an ideal strategic fit, as our rig types, markets, customers and expertise complement each other with minimal overlap."

The offer by Ensco values Pride International at $41.60, a premium of 21 percent over its Friday close.

Terms of the deal will be cash and shares, whereby shareholders in Pride will receive 0.4778 newly issued shares of Ensco, plus $15.60 in cash for each share of Pride common stock.

Ensco shareholders will have a stake of about 62 percent in the combined company and Pride shareholders close to 38 percent. The deal could close in the second quarter.

The company will be named Ensco after the deal is closed.

Pride was trading at $39.87, gaining $5.48, or 15.93 percent, as of 11:28 AM EST. Ensco was trading at $52.00, down 2.41, or 4.43 percent.

Pride International (NYSE:PDE) EPS Lowered on Late Start Ups

Pride International (NYSE:PDE) had their EPS estimate for 2011 lowered by Barclays, which cited late start ups as the reasoning behind their decision.

Barclays says, "Lowering Estimates: Primarily due to later than expected start ups for the Deep Ocean Ascension and the Deep Ocean Clarion, we are reducing our 2011 EPS estimate to $2.75 (from $2.90). Our 4Q10 estimate of $0.41 remains unchanged. We are also modestly lowering our 2012 EPS estimate to $3.30 (from $3.37) as we now expect the Pride South Seas to remain stacked through 2012."

Barclays maintains an "Overweight" rating on Pride International (PDE), which closed Monday at $32.55, down $0.08, or 0.25 percent. Barclays has a price target on Pride of $35.

Pride International (NYSE:PDE) Lacks Positive Catalyst in 2011

Pride International (NYSE:PDE) have little in the way of postive catalysts in 2011, and older midwater floaters and jackups could produce negative catalysts going forward, according to Global Hunter.

Global said, "Pride stock currently trades near our $31 price target and with the exception of being rumored as a takeover target, we anticipate limited positive catalysts. The contracts provided by the new ultra-deepwater rigs provide a solid backlog, but near-term challenges remain regarding startup timing for the rigs. Furthermore, the older jackups and midwater floaters could produce negative catalysts as well with the potential for reduced utilization or dayrates. As such, we reiterate our rating."

Global Hunter Securities reiterates a "Neutral" on Pride International, which was trading at $32.43, down $0.04, or 0.12 percent, as of 1:53 PM EST. Global has a price target of $31 on them.