Ensco Orders New Jackup Rig

Ensco Plc (ESV - Analyst Report) has placed an order with Keppel FELS Limited (“KFELS”) in Singapore to exercise an option to build a new jackup rig. The shipyard construction price for the new ultra-premium harsh environment jackup rig is expected to be nearly $245 million, to be paid in two installments.

The cost is estimated to be $260 million after considering commissioning, systems integration testing and project management. Ensco has managed to ink convenient payment terms for the rig. It is required to clear 20% payment at the time of signing the contract while the remaining 80% is payable upon delivery, which is scheduled for the third quarter of 2014.

The newbuild jackup rig will operate in water depths up to 400 feet in harsh environmental regions. The rig, which is an improved version of the KFELS Super A design, is equipped with high-temperature, high-pressure equipment, a state-of-the-art cantilever envelope, 2.5 million pound quad derrick, automated hands-free offline pipe handling systems, ultra-high capacity jacking and fixation systems, 150 person quarters and strict noise and ergonomic standards.

Upon completion, the new rig will boast of a huge improvement over the previous ones as these features are now found only in the largest ultra-harsh environment jackups. Ensco makes constant endeavors to upgrade its fleet and generate value for its shareholders.

This is evidenced from the fact that it has seven newbuild rigs under construction including the latest order. These comprise two drillships, two ultra-deepwater semisubmersibles and three ultra-premium harsh environment jackups.

Ensco holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the stock. Noble Corporation (NE - Analyst Report) and Schlumberger Limited (SLB - Analyst Report) are major competitors of the company.

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