Norwegian oilfield service firm Seadrill Limited (SDRL - Free Report) announced that it has exercised an option with China-based Dalian Shipbuilding Industry Offshore Co. Ltd. (DSIC Offshore), for building two high specification jack-up drilling rigs.
The contract – valued at $230 million – comprises of project management, drilling and handling tools, spares, capitalized interest and operations preparations. Deliveries of the two units are expected by the third and fourth quarters of 2015.
Seadrill added that the two units will be of F&G JU2000E design. The jack-up drilling rigs will be capable of working at water depths of roughly 400 feet and will drill at water depths of 30,000 feet.
Incidentally, Seadrill already has four jack-ups under construction at DSIC Offshore, of which two are expected to be delivered in 2013 and the remaining two in 2015.
Management noted that with the two new orders, Seadrill’s jack-up rig count will increase to 28. With the demand for this class of assets likely to increase in the coming years – both in terms of increased day rates and durations – we see the new DSIC deal as a positive for Seadrill.
Based in Hamilton, Bermuda, Seadrill renders offshore drilling services, which include exploration, completion and maintenance of offshore wells; production and well maintenance; and well services to customers worldwide. The company is operating 75 units which include jack-up rigs, semi-submersible rigs, drill ships, and tender rigs.
Seadrill shares currently retain a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
In the energy sector, firms that are expected to outperform the U.S. equity market over the next one to three months are NGL Energy Partners LP (NGL - Free Report) , Range Resources Corporation (RRC - Free Report) and Calumet Specialty Products Partners LP (CLMT - Free Report) . All the three firms currently carry a Zacks Rank #1 (Strong Buy).