Conoco Hires Rig for N Sea Drilling - Analyst Blog

By Zacks Equity Research,

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Texas-based ConocoPhillips ( COP ) has hired a jackup rig--Maersk Resolve--from Maersk Drilling for deployment in the UK North Sea by the end of 2012. ConocoPhillips has chartered the rig for a two-well job valued at around $26 million, implying that ConocoPhillips may have included some of its own options.

Maersk has quoted a day rate of about $157,500, without the inclusion of any mobilization fee while drilling of two wells is anticipated to take approximately 165 days collectively.

With leading positions in both natural gas and heavy crude oil in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term.

ConocoPhillips has thus hired, Maersk Resolve--a highly efficient, 350ft jackup rig in Maersk Drilling's fleet. The rig has constantly been engaged in the North Sea, since its delivery in 2009.

However, the deployment may be delayed as it is yet to arrive at its currently scheduled drilling job under UK junior  Xtract Energy for a Noreco-operated Luna well off Denmark.

The rig is presently being operated by Maersk Oil & Gas in Northern Europe, where it got delayed due to bad weather in December, and will not be free to commence drilling on the Luna well before the end of January 2012. Further delays are also possible if weather conditions are not suitable for drilling the Luna well. The drilling on site at Luna is expected to take one month.

ConocoPhillips has separated its downstream business to unlock value, unlike its peer companies-- ExxonMobil Corporation ( XOM ) and Chevron Corporation ( CVX ), which continue to operate as a single unit.

ConocoPhillips holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. We maintain a Neutral recommendation on the stock for the long term.

CONOCOPHILLIPS ( COP ): Free Stock Analysis Report
CHEVRON CORP ( CVX ): Free Stock Analysis Report
EXXON MOBIL CRP ( XOM ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: COP , CVX , XOM

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