Transocean Offshore

(RIG) - Get Report

and

R&B Falcon

(FLC) - Get Report

are close to announcing drilling contracts for several rigs, according to analysts. But the rental rates aren't expected to generate much enthusiasm.

Two of the four contracts -- two from each company -- are expected to be lower than current rental rates. The declines in so-called day rates underscore an important point -- oil companies are still driving the deals.

With oil prices weak, demand for drilling is lackluster. Projections say worldwide oil company spending will fall as much as 30% this year. And dozens of rigs are finishing contracts this year, increasing the supply. All this gives oil companies the upper hand in drilling contract negotiations. Major oil companies with a lot of work, such as

Petrobras

in Brazil, can go bargain hunting for rigs.

One of the expected trouble spots during the next few months will be the North Sea. Between now and June 30, 23 rigs will finish contracts there, says Tom Marsh, an editor at

Offshore Data Services

, a Houston-based publisher which tracks rig markets. "There's not going to be work" for a lot of them, Marsh says.

In this atmosphere, R&B may have found work for the

Jack Bates

, the semisubmersible rig whose contract in the North Sea was recently

cancelled by

Mobil

(MOB)

for alleged operating deficiencies. Ironically, a consortium of companies including Mobil are signing the new contract, analysts say, for a five- or six-month period. The day rate is said to be $150,000. Its original contracted rate with Mobil was $196,000 per day.

Falcon couldn't be reached for comment. Dave Dickson, a Mobil spokesman, confirmed Mobil will use rigs in the North Sea at some point later this year. He couldn't provide other details.

R&B Falcon also is marketing its drillship

Peregrine VII

for $120,000 per day, the lowest rate for a ship of this capacity, say two analysts who follow Falcon and who asked not to be named. R&B will likely announce a 2 1/2-year contract within two weeks, these analysts say. The rig, behind by about two months in its construction schedule, is already under contract to

BP Amoco

(BPA)

at a day rate of $114,000, but the contract will be cancelled for the late delivery, according to the analysts. R&B has alerted the investment community to the possibility of this cancellation, the analysts say.

Hugh Depland, a BP Amoco spokesman, says the conversion of the Peregrine VII is under way and the current contract is still in place. "There has been no decision to cancel that I'm aware of," he says.

Meanwhile, Transocean Offshore may be close to closing a 30-month contract with Brazil's Petrobras for its drillship

Discoverer Seven Seas

, say three people who follow the company. The contract is for an estimated $145,000 per day, these people say. The rig is under contract to

Exxon

(XON) - Get Report

through July, at a day rate of $115,000. But Transocean is effectively getting $143,000 per day on this rig because Exxon has chipped in funds to help pay for the rig's upgrade, says Jeff Chastain, Transocean's director of investor relations. Seven Seas is operating under a farm-out agreement to

Elf Aquitaine

(ELF) - Get Report

in the Gulf of Mexico.

But the $145,000 rate is lower than expected; analysts interviewed for this story will review Transocean's earnings estimates based on what transpires with contracts over the next few weeks. The

First Call

consensus estimate for Transocean's 2000 earnings is $2.09; these analysts say $1.75 to $1.80 for 2000 is a more realistic number at this point.

Transocean is indeed investigating opportunities in Brazil, says Chastain, but "as of today, there is nothing definite to report." The Seven Seas has worked for Petrobras in the past, Chastain adds, "with exceptional operational performance. The rig's past performance is something that makes Petrobras want it very dearly."

Chastain likewise was hesitant to confirm talk of Transocean's fourth-generation, or late-model, semisubmersible rig

Polar Pioneer

continuing its work for

Norsk Hydro

(NHY)

in the North Sea. "There is a program being considered at this time." Chastain says. But until terms are firm, "I should not go into much detail," he says. The people who follow Transocean say the new day rate will be close to $135,000 per day for six months. The rig's current contract, which includes four six-month options, is scheduled to expire in August. Chastain says Transocean now is getting $140,000 per day for the Pioneer; that figure includes a base day rate plus a bonus and "pass-through costs."

Transocean has 70% of its fleet time booked for this year, says Chastain. Revenue from its working rigs will offset lost revenue from rigs that may remain idle. Transocean has approximately 15 rigs that are finishing up contracts this year, six in the year's first half and nine in the second half.