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Equinor Awards Contract to Odfjell for Deepsea Atlantic Rig

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Equinor ASA (EQNR - Free Report) has awarded a contract to Odfjell for the use of the Deepsea Atlantic rig.

The contract relates to spudding of six wells that comprises drilling of three production wells each for the Fram and Askeladd licenses. Per the terms, the first rig contract has been inked for Deepsea Atlantic. Odfjell has also received a master framework agreement (MFA). This framework will be used as an example for other future rig contracts on the Norwegian continental shelf.

Deepsea Atlantic, a semi-submersible 6th generation mobile drilling rig, is expected to commence operations in January 2019.

The value for the six wells contract is projected in the range of $150-200 million. Along with drilling services, the rig owner is in charge of casing running, slop treatment and cuttings handling, remote control vehicle (ROV) as well as fuel management. Initially, the contract is for 18 months that might get extended.

Deepsea Atlantic is currently on contract with Equinor and its license partners. The rig, which is likely to be under contract with Equinor for a 10-year classification, will first conclude a drilling program for the Visund and Utgard licenses.

First, the three so-called dual multilateral wells on the Fram field will be spud by the rig. The wells will include two branches, which will diverge from the main wellbore. Thereafter, the rig will move to Askeladd to drill three production wells. The logistics bases at Mongstad and Hammerfest will support the operations. The contract with Deepsea Atlantic fortifies the letter of intent announced by Odfjell Drilling on Apr 16, 2018.

Fram Vest located in the North Sea came online in 2006. Two years later, the field attained its plateau rate of 50,000 barrels of oil per day and peak production was reached more than a decade ago at over 60,000 barrels of oil per day.The field is estimated to be in production for the next 15 years. Per Equinor, the three wells in the Fram complex could produce 70 million new barrels of oil and gas.

Askeladd is not expected to start yielding before 2022. The regulator estimates the field to hold about 31 million barrels of oil.

Recently, the company changed its name to Equinor from Statoil as it wanted to remove oil from the name. This is a major move recently taken by many energy players keeping in mind the effect of greenhouse gas emission.

Price Performance

During the past three months, Equinor’s shares have gained 10.3% against the industry’s 1.8% decline.

Zacks Rank & Key Picks

Equinor currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked players in the same sector are Nine Energy Service, Inc (NINE - Free Report) , Anadarko Petroleum Corp (APC - Free Report) and CVR Refining, LP (CVRR - Free Report) . All three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nine Energy Service is engaged in delivering onshore completion and production services to unconventional oil and gas resource development. The company pulled off a positive earnings surprise of 28.57% in the preceding quarter.

Anadarko Petroleum is one of the world's largest independent oil and gas exploration and production companies. It witnessed an average positive earnings surprise of 89.24% in the last four quarters.

Sugar Land, TX-based CVR Refining is an independent downstream energy partnership with refining and associated logistics properties in the Midcontinent United States. The company delivered an average positive earnings surprise of 7.05% in the last four quarters.

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