Leading contract drilling company,
Diamond Offshore Drilling Inc
) has recently awarded a contract to Singapore-based Jurong
Shipyard for converting an out-of-work rig built in 1976 into a
deepwater driller at a cost of about $370 million.
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The rig will be named Ocean Apex and is expected to be delivered by
the second quarter of 2014. Ocean Apex will utilize an existing
hull of Ocean Bounty, a cold stacked unit of Diamond Offshore. This
would inevitably reduce the cost as well as the time required to
construct the rig.
Ocean Apex will be designed in a manner that it would surpass the
specifications of a fourth-generation newbuild unit. It will be
operational in water depths of up to 6,000 feet and will possess a
variable deck load of 7,000 long tons. The rig - with an employee
capacity of 140 - will also comprise a 15,000 five-ram blowout
preventer. Apart from these, it will also feature a hook-load
capacity of maximum two million pounds as well as one of the
largest deck area of any semisubmersible rig in the world.
Diamond was encouraged by the strong demand for another moored
semisubmersible rig, the Ocean Onyx, which just landed a contract
for $490,000 per day starting when its conversion is complete next
Earlier in the year, Ocean Onyx had been ordered to be constructed
utilizing an existing hull of Ocean Voyager, a cold stacked unit of
Diamond Offshore. Recently, the Ocean Onyx secured a $490,000 per
day contract and is expected to start work once it is delivered by
the third quarter of 2013.
Hence, a combination of upgrades and new construction has been the
long-term strategy of the company and has allowed it to become a
major player in the industry. We expect the rig order to present
significant opportunity for Diamond Offshore's deepwater
Ocean Apex is expected to emerge as the perfect choice to meet the
rising demand in midwater and deepwater segment. This will be
further strengthened by the increasing focus on deepwater drilling
by the world's leading oil companies and a recent find in Brazil.
Diamond Offshore - whose rival
) recently placed an order for a new sixth-generation
ultra-deepwater drillship for $645 million to be delivered by the
third quarter of 2014 - holds a Zacks #2 Rank (short-term Buy
rating). We maintain a Neutral recommendation on the stock for the