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Rig owner Rowan Companies plc (RDC - Analyst Report) has inked a three-year contract with Anadarko Petroleum Corporation (APC - Analyst Report) for Rowan Resolute. This is Rowan Companies’ second newbuild drillship.

Rowan Resolute is being constructed by Hyundai Heavy Industries Co. Ltd. at its shipyard in Ulsan, South Korea. The drillship is scheduled for delivered by the second quarter of 2014 and will commence operations in the U.S. Gulf of Mexico by late third quarter 2014.

An ultra deepwater drillship based on GustoMSC P10,000 design – Rowan Resolute – is capable of drilling wells to depths of 40,000 feet in waters of about 12,000 feet.

The effective day rate ranges between $606,000 and $609,000, including mobilization revenues. The rate and the initial return on the drillship are not likely to affect the investment outlook in the segment. However, it is a positive for the company as it will perk up the contracted backlog by around 20% to around $4 billion.

The contract also de-risks Rowan's newbuild program as only two uncontracted rigs are left and brings the company in contact with a core deepwater customer that has an extensive exploration and development program.

The remaining two uncontracted drillships are expected to be delivered from the shipyard by the end of Oct 2014 and Mar 2015, respectively.

Rowan’s premium high-specification rig fleet enjoys greater utilization than most other shallow-water fleets. The company with its improved rig execution level, stands to benefit from the upward trend in the high-spec jackup market and mining equipment orders. The market’s inclination for high-specification assets favors the company, as the majority of Rowan’s fleet comprises high-end premium jackups with a long-term strategy in place. Long-term growth drivers for Rowan include its high quality fleet and strong relationship with operators.

Rowan carries a Zacks Rank #3 (Hold). However, there are other Zacks Ranked #1 (Strong Buy) stocks – Newpark Resources Inc. (NR - Snapshot Report) and Gulfmark Offshore, Inc. (GLF - Snapshot Report) – that are expected to perform impressively over the short term.

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