Dril-Quip, Inc’s (DRQ - Free Report) wholly-owned subsidiary, Dril-Quip (Europe) Limited, has received a contract from Premier Oil Exploration and Production Limited to supply subsea production systems for its project offshore the Falkland Islands.
A letter of intent has been inked by Dril-Quip with Premier Oil Exploration and Production Limited for the Sea Lion Phase 1 Development. Per the agreement, Dril-Quip will provide 23 subsea production systems comprising wellheads, trees, control systems, related production and injection manifolds, subsea umbilicals along with associated services.
In August 2018, Dril-Quip is expected to begin pre-sanction engineering work. The company will receive a formal contract award, post the confirmation of a definitive agreement and when Premier Oil Exploration and Production Limited makes a final investment decision.
Moreover, Dril-Quip’s strong balance sheet will provide vendor financing for a part of the contract. This is in sync with the company’s overall strategy.
About Sea Lion Development
Sea Lion, an oil field in the Falkland Islands, off the Argentinian coast, is part of the exploration license PL032 in the North Falkland Basin.
In 2010, oil was discovered in the prospect when Rockhopper Exploration drilled the well 14/10-2. In July 2012, Rockhopper farmed 60% of its total holding in North Falkland Basin licenses to Premier Oil. Rockhopper received an upfront cash payment of $231 million, a contribution of $722 million to Rockhopper's share of the Sea Lion development costs and a net exploration carry of $48 million.
Ocean Guardian, a semi-submersible rig owned by Diamond Offshore Drilling Inc (DO - Free Report) , was used at the field. Sea Lion is anticipated to commence production in 2020.
In the past three months, Dril-Quip’s shares have gained 23.9% compared with the industry’s rise of 13.9%.
Zacks Rank & Key Picks
Dril-Quip currently carries a Zacks Rank #5 (Strong Sell).
A few better-ranked players in the same sector are Occidental Petroleum Corporation (OXY - Free Report) and China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% 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 trailing four quarters.
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