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Seadrill in Deal with DSIC Offshore

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Norwegian oilfield service firm Seadrill Limited (SDRL - Free Report) announced that it has entered into a contract with China-based Dalian Shipbuilding Industry Offshore Co. Ltd. (DSIC Offshore), for building two high specification jackup drilling rigs.  

The contract – valued at $230 million – comprises project management, drilling and handling tools, spares, capitalized interest and operation preparations. Deliveries of the two units are expected by the fourth quarter of 2015 and first quarter of 2016, respectively.  

Seadrill added that the two units will be of F&G JU2000E design. The jackup drilling rigs will be capable of working at water depths of roughly 400 feet and drill at water depths of 30,000 feet.

Including this contract, Seadrill now has eight jackups under construction at DSIC Offshore, of which two are expected to be delivered in 2013, five in 2015 and one in 2016.  

Management at Seadrill said that these two orders will increase its jackup rig count to 29. Management believes that demand for this class of assets is likely to grow in the coming years, both in terms of increased day rates and durations.

Back in March, Seadrill entered into a contract with DSIC Offshore for the construction of two high specification jackup drilling rigs valued at $230 million.

Last month, Seadrill reported better-than-expected first-quarter 2013 earnings. Earnings per share came in at 85 cents, which surpassed the Zacks Consensus Estimate of 59 cents owing to better utilization of rigs.

Seadrill shares currently retain a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, there are other firms in the energy sector that are expected to outperform the U.S. equity market over the next one to three months. These include Zacks Ranked #1 (Strong Buy) Newpark Resources Inc. (NR - Free Report) , Oiltanking Partners L.P. and InterOil Corporation .

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