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Shell (SHEL) to Extend Maersk Drillship Contract for 6 Months

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Shell plc (SHEL - Free Report) has taken up an option of a contract extension for the seventh generation drillship — Maersk Voyager — for work offshore Mexico once it concludes its current assignment.

As of now, the drillship is mobilizing for the London-based British multinational oil and gas company’s drilling campaign offshore Suriname. The disclosed six-month firm extension is anticipated to take effect next April in direct continuation of the rig’s current contract.

The Denmark-based drilling rig operator — Maersk Drilling — estimates the value of the contract extension to be about $77 million, excluding integrated services expected to be provided and potential performance bonuses. Maersk revealed that the options included in the contract have been modified, and it now consists of options to add up to 18 months of additional drilling work.

Moreover, Shell and Maersk will implement the RigFlow solution developed by Maersk Drilling’s subsidiary, Horizon56, for work offshore Mexico. This will standardize and digitalize the core workflows involved in well construction, including the real-time exchange of information between onshore planning units, offshore drilling teams and supporting service firms.

Built in 2014, Maersk Voyager is a high-spec ultra-deepwater drillship, which has been under contract with SHEL in São Tomé & Principe/Suriname from April 2022. Per Maersk’s fleet report status, the rig’s day rate is $295,000.

Shell is one of the primary oil supermajors, a group of U.S. and Europe-based big energy multinationals with operations spanning worldwide. The company is fully integrated as it participates in every aspect related to energy, from oil production to refining and marketing.

Shell currently carries a Zacks Rank #3 (Hold). Investors interested in the energy space might look at the following companies — Marathon Petroleum (MPC - Free Report) , Liberty Energy (LBRT - Free Report) and NexTier Oilfield Solutions (NEX - Free Report) — each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Marathon’s 2022 earnings stands at $21.15 per share, indicating an increase of approximately 763.3% from the year-ago earnings of $2.45.

MPC beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 56.7%.

The Zacks Consensus Estimate for Liberty’s 2022 earnings is pegged at $1.70 per share, up about 266.7% from the year-ago loss of $1.02.

The Zacks Consensus Estimate for LBRT’s 2022 earnings has been revised upward by about 129.7% over the past 60 days from 74 cents to $1.70 per share.

The Zacks Consensus Estimate for NexTier’s 2022 earnings stands at $1.35 per share, suggesting an increase of about 413.9% from the year-ago loss of 43 cents.

NEX beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 269.5%.

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