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BP Awards Contract to Valaris for Offshore Drilling Projects

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BP plc (BP - Free Report) awarded a four-well contract to Valaris Limited for drilling activities in the Greater Tortue Ahmeyim cross-border development, one of the deepest offshore projects in Africa.

The Greater Tortue Ahmeyim is an offshore liquefied natural gas (“LNG”) project, which involves the production of gas at two kilometers below the sea surface on the Mauritania and Senegal area. Notably, the Greater Tortue Ahmeyim field was discovered by project partner Kosmos Energy (KOS - Free Report) in 2015.

BP, as the operator, would use the double-hull DP drillship, VALARIS DS-12, to drill four offshore wells. The contract involves gas production from an ultra-deepwater subsea system, and mid-water floating production, storage and offloading (“FPSO”) vessel, which will be installed and commissioned by TechnipFMC (FTI - Free Report) .

Notably, the FPSO will process the gas and remove heavier hydrocarbon components, following which it will be transferred to the GIMI Floating Liquid Natural Gas facility at a nearshore hub situated on the Mauritania and Senegal maritime border. The facility is expected to produce 2.5 million metric tons of LNG per year on average.

The contract is expected to initiate in the first quarter of 2022, with an estimated duration of 285 days. Although Valaris has not revealed any financial details of the contract, Bassoe estimates it to be approximately $200,000. This would bring the total value of the contract to about $57 million.

The project suffered continued timing and cost overruns amid the pandemic, which has affected the timing of the first gas. Notably, the project partners received a revised forecast from TechnipFMC that the FPSO delivery is likely to be delayed due to labor shortages at the COSCO yard in China. Hence, project costs are expected to increase and will push the timing of the first gas to third-quarter 2023.

Company Profile & Price Performance

Headquartered in London, UK, BP is a fully integrated energy company, with a strong focus on renewable energy.

Shares of the company have outperformed the industry in the past three months. Its stock has gained 3.9% compared with the industry’s 0.8% growth.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Zacks Rank & Stock to Consider

The company currently carries a Zack Rank #3 (Hold).

One better-ranked player in the energy space is Antero Resources Corporation (AR - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for Antero Resources’ 2021 earnings has been raised by 31.3%.

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Antero Resources Corporation (AR) - free report >>