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Noble Corp (NE - Analyst Report), owner of the world's third-largest offshore drilling fleet, has been contracted by Statoil ASA (STO - Analyst Report) for the construction of a newbuild ultra-high specification jackup based on Category J design for performing drilling services on the Mariner project.

The contract is for a period of four years with a one or two year option. The jackup, which will be employed in the United Kingdom sector of the North Sea, is expected to begin operations during the third quarter of 2016. The total value of the four-year contract, including mobilization, is estimated at $655 million.

The ultra-high specification jackup will be equipped to function in water depths of about 70 meters to 150 meters and drill wells to a maximum total drilling depth capacity of 10,000 meters. The rig will be designed to operate in rough conditions and be capable of deploying either a surface or subsea blowout preventer when drilling wells in tough environments.

Statoil, the operator of Mariner project, awarded the contract on behalf of its partners JX Nippon Exploration and Production (U.K.) Limited and Cairn Energy PLC.

Noble is in the last stage of negotiating a contract with respect to the construction of the new jackup and anticipates the delivered costs to be about $690 million. This is inclusive of project management, spares and start-up costs, but excludes capitalized interest.

The Mariner heavy oil field involves investments of over GBP 4.7 billion and is scheduled to come online in 2017. The field is expected to produce for about 30 years and have an average yield of 55,000 barrels of oil per day over the plateau period from 2017 to 2020.

Noble holds a Zacks Rank #3 (Hold). However, there are other stocks in the oil and gas industry like Dawson Geophysical Company (DWSN - Snapshot Report) and SM Energy Company (SM - Analyst Report) that appear more attractive in the short term. Both stocks carry a Zacks Rank #1 (Strong Buy).

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