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Noble Corp (NE - Analyst Report), owner of the world's third-largest offshore drilling fleet, has inked a couple of three-year period drilling contracts with Plains Exploration & Production Company for two of its new ultra deepwater drillships.

Both the drillships – Noble Sam Croft and Noble Tom Madden – are currently under construction on a fixed price basis at the Hyundai Heavy Industries Co. Ltd. (HHI) shipyard in Ulsan, South Korea. The contracts entail the drillships to operate mainly in the U.S. Gulf of Mexico (GoM).

The deliveries of Noble Sam Croft and Noble Tom Madden are scheduled for the second quarter of 2014 and second half of 2014, respectively. The contracts are likely to begin operations after moving to the GoM and upon receiving customer acceptance. Each rig is expected to generate revenues of about $693 million, including mobilization fee, over the three-year period. This will boost the total potential backlog by over $1.3 billion.

With these latest contracts, Noble now has all four under-construction drillships at HHI under contract. Based on a Hyundai Gusto P10000 hull design, all these drillships are competent to operate in water depths of about 12,000 feet and provide a variable deck load of 20,000 metric tons.

Noble Sam Croft and Noble Tom Madden will be fully geared to function in water depth of about 10,000 feet as well as provide DP-3 station keeping, two complete six-ram BOP systems and multiple parallel activities. These characteristics will aid in enhancing overall well construction capabilities and lodge about 210 personnel.

Both rigs will be fitted with a 165-ton heave compensated construction cranes to assist deployment of subsea production equipment. The rigs will also offer a new level of efficiency through field development programs. The addition of these units to Noble’s fleet has helped in modernizing its fleet as well as improving its fleet capabilities. These will also augment the company’s earnings going forward.

Noble holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. There are other stocks in the oil and gas industry, like Range Resources Corporation (RRC - Analyst Report) and Stone Energy Corporation (SGY - Analyst Report), which appear more promising and carry a Zacks Rank #1 (Strong Buy).

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