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SeaDrill (SDRL) West Pegasus Contract Terminated by Pemex
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SeaDrill Limited (SDRL - Free Report) declared the receipt of contract cancellation notice for West Pegasus, a semisubmersible rig, from Pemex Exploracion y Servicios.
It is to be noted that SeaDrill entered into a provisional commitment during the second quarter of 2015 for a two-year contract extension for the semisubmersible unit. The dayrate for the remaining period of the rig’s original contract was lowered along with the contract extension commitment. Along with the provisional commitment, SeaDrill decided to lower day rate for five jackups, working for Pemex, over a period of one year once the West Pegasus contract extension was finalized in the first quarter.
Even after all these commitments, when Pemex sought West Pegasus contract cancellation, SeaDrill started assessing its legal options. In fact, SeaDrill will try to get compensated for the dayrate discount it allowed along with the expenses it will incur from rig demobilization.
Headquartered in London, SeaDrill Limited is one of the leading offshore drilling contractors in the world. The company has one of the youngest drilling fleet among all the offshore drilling contractors that is capable of operating in challenging environments. Most importantly, with less oil being discovered on land and companies having to dig even deeper to get to reserves, SeaDrill– anticipated to release second-quarter 2016 results on Aug 25–is poised to benefit from a market with robust multi-year demand trends, given its technologically advanced and versatile fleet.
However, oil prices have recovered from the mid-Feb lows but are still way below the level it reached during mid-2014. Following the commodity price weakness, there might be less incentives for exploration and production activities by upstream energy players and hence SeaDrill may get further rig contract cancellation notices.
As a result, SeaDrill carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players in the energy sector include Matador Resources Company (MTDR - Free Report) , North Atlantic Drilling Limited and Devon Energy Corporation (DVN - Free Report) . Each of the stocks sports a Zacks Rank #1 (Strong Buy).
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SeaDrill (SDRL) West Pegasus Contract Terminated by Pemex
SeaDrill Limited (SDRL - Free Report) declared the receipt of contract cancellation notice for West Pegasus, a semisubmersible rig, from Pemex Exploracion y Servicios.
It is to be noted that SeaDrill entered into a provisional commitment during the second quarter of 2015 for a two-year contract extension for the semisubmersible unit. The dayrate for the remaining period of the rig’s original contract was lowered along with the contract extension commitment. Along with the provisional commitment, SeaDrill decided to lower day rate for five jackups, working for Pemex, over a period of one year once the West Pegasus contract extension was finalized in the first quarter.
Even after all these commitments, when Pemex sought West Pegasus contract cancellation, SeaDrill started assessing its legal options. In fact, SeaDrill will try to get compensated for the dayrate discount it allowed along with the expenses it will incur from rig demobilization.
Headquartered in London, SeaDrill Limited is one of the leading offshore drilling contractors in the world. The company has one of the youngest drilling fleet among all the offshore drilling contractors that is capable of operating in challenging environments. Most importantly, with less oil being discovered on land and companies having to dig even deeper to get to reserves, SeaDrill– anticipated to release second-quarter 2016 results on Aug 25–is poised to benefit from a market with robust multi-year demand trends, given its technologically advanced and versatile fleet.
However, oil prices have recovered from the mid-Feb lows but are still way below the level it reached during mid-2014. Following the commodity price weakness, there might be less incentives for exploration and production activities by upstream energy players and hence SeaDrill may get further rig contract cancellation notices.
As a result, SeaDrill carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.
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Some better-ranked players in the energy sector include Matador Resources Company (MTDR - Free Report) , North Atlantic Drilling Limited and Devon Energy Corporation (DVN - Free Report) . Each of the stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>