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Shell (SHEL) Extends Deepsea Bollsta Drilling Rig Contract

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Shell plc (SHEL - Free Report) and the Norwegian offshore drilling company Odfjell Drilling, on behalf of Northern Ocean, agreed to extend their contract for the Deepsea Bollsta drilling rig.

According to a report in November 2022, the Deepsea Bollsta semi-submersible rig was en route to Namibia to begin its drilling assignment with Shell, which was secured in late August. The sixth-generation semi-submersible Bollsta rig can house 140 people and operate in unfavorable conditions in up to 3,000 meters of water.

Shell Namibia, a Shell subsidiary, agreed to extend the contract for the drilling rig. Northern Ocean stated that the contract's term has been extended for six months from December 2023 through June 2024. The agreement offers an additional extension option of six months.

The rig owner stated that the contract extension provides a revenue backlog of approximately $88.6 million. The additional extension option is expected to add another $81 million.

In the beginning of April 2023, the Deepsea Mira rig began its journey from Bergen, Norway, to the first well in Namibia for its multi-country drilling contract with TotalEnergies, which was awarded in December 2022. With two enormous oil discoveries made by TotalEnergies and Shell, Namibia secured a place on the global oil and gas exploration map last year.

Northern Ocean aims to begin the contract at the end of the second quarter due to some delays in loading equipment and performing necessary maintenance during the transit.

Zacks Rank & Key Picks

Currently, Shell carries a Zack Rank #3 (Hold).

Some better-ranked players for investors interested in the energy sector are Sunoco LP (SUN - Free Report) , Murphy USA Inc. (MUSA - Free Report) and RGC Resources Inc. (RGCO - Free Report) . While both Sunoco and Murphy USA sport a Zacks Rank #1 (Strong Buy), RGC Resources carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model with sustainable and predictable cash flows. For this year, SUN has witnessed an upward earnings estimate revision in the past 30 days.

Murphy USA, a leading retailer of gasoline, operates stations close to Walmart supercenters and sells low-cost, high-volume fuel. MUSA, with more than 1,700 stores, has witnessed an upward earnings estimate revision for 2023 and 2024 in the past seven days.

RGC Resources is a holding company that offers energy and associated products and services through its operational subsidiaries — Roanoke Gas Company and RGC Midstream, LLC. RGCO has thousands of customers through its natural gas distribution companies that serve the Roanoke Valley and Bluefield, Virginia and West Virginia areas. For this year, the company has witnessed an upward earnings estimate revision in the past 30 days.

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