Rowan Companies plc (RDC - Free Report) has inked a three-year contract with Cobalt International Energy, L.P. (CIE - Free Report) for one of Rowan’s new ultra-deepwater drillship – Rowan Reliance.
Rowan Reliance is under construction at the Hyundai Heavy Industries Co. Ltd. shipyard in Ulsan, South Korea. The drillship is scheduled for delivery at the end of Oct and is likely to operate in the U.S. Gulf of Mexico.
Upon mobilization, the contract is expected to be effective in late Jan 2015. Rowan Reliance will have an effective dayrate of $602,000, including mobilization revenues. The contract is estimated to add $660 million to its revenue backlog.
HHI is constructing four ultra-deepwater drillships for Rowan, Rowan Reliance being one of them. All four drillships are based on a GustoMSC P10,000 hull design which will enable drilling up to a depth of 40,000 feet in water depths of about 12,000 feet.
The DP-3 compliant, dynamically positioned drillship will be fitted with retractable thrusters, two readily deployable seven-ram BOP systems, five mud pumps, dual mud systems and a maximum hookload capacity of 1,250 tons.
With this latest award for Rowan Reliance, Rowan has three of its four ultra-deepwater drillships under construction at HHI under contract. Rowan Relentless, the fourth uncontracted drillship, is expected to be delivered from the shipyard at the end of Mar 2015.
Rowan’s premium high-specification rig fleet enjoys greater utilization than most other shallow-water fleets. We believe that the company, with its improved rig execution level, stands to benefit from the upward trend in the high-spec jackup market and mining equipment orders.
Rowan holds a Zacks Rank #3 (Hold), which is equivalent to a short term hold rating. However, there are other stocks in the oil and gas sector – Cabot Oil & Gas Corp. (COG - Free Report) and Dril-Quip, Inc. (DRQ - Free Report) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.