Rowan Companies plc’s (RDC - Free Report) R-Class drillship — Rowan Relentless — has been hired by Exxon Mobil Corporation (XOM - Free Report) .
The award, related to the drilling of a prospect in the US Gulf of Mexico, is expected to begin in September 2018 and will continue for 80 days. Subsequently, Rowan’s drillship would drill four one-well, priced options.
Recently, Rowan’s new offshore drilling entity — ARO Drilling —commenced activities. The entity is jointly owned by the company and Saudi Aramco, each holding a 50% stake. ARO will be able to participate in the growing offshore drilling market of Saudi Arabia. Moreover, Rowan has the largest number of jack up fleet among all the drillers. As of May 1, 2018, the company’s drilling fleet comprised 23 jack-up rigs and four ultra deepwater drillships. The new entity provides visible earnings growth over the next 15 years.
There are 161 rigs in the global ultra deepwater fleet but only few have the high specifications for today’s demanding requirements.7th Generation rigs are distinct from earlier generation rigs. Rowan’s drillships are superior among 7th Generation rigs and are exceptionally positioned to provide the key features preferred by the market.
Moreover, rising oil prices are anticipated to push up the demand for rigs. However, dayrates are not expected to improve until 2019. Marketed utilization is required to return to 85% for pricing to improve steadily.
In the past three months, Rowan’s shares have gained 35% compared with the industry’s 13.6% rise.
Zacks Rank & Key Picks
Rowan currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Anadarko Petroleum Corp (APC - Free Report) and China Petroleum and Chemical Corporation (SNP - Free Report) . These stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anadarko Petroleum is one of the world's largest independent oil and gas exploration and production companies. It pulled off an average positive earnings surprise of 89.24% in the last four quarters.
Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the last four quarters.
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