Hamilton, Bermuda-based drilling firm
) has inked a turnkey contract to build an ultra-deepwater drill
ship at Samsung Heavy Industries' yard in South Korea, thereby
increasing its order book to 19 units.
The contract is valued at $600 million comprising project
management, drilling and handling tools, spares, capitalized
interest and operations preparations. Delivery of the unit is
scheduled for the fourth quarter of 2014.
SeaDrill added that the latest drillship will be of equivalent
design as the existing six drillships being built at Samsung. The
unit will have a hook load capability of 1,250 tons, capable of
working at water depths of up to 12,000 feet. The units will be
equipped with a seven-ram blowout preventer (BOP) stack and with
storing and handling capacity for a second BOP.
In addition, Seadrill has agreed on a fixed-price option to
construct another drillship at the yard. Its delivery is expected
to be in the first quarter of 2015. Seadrill, the world's largest
driller by market capitalization, is busy taking advantage of low
shipyard costs and a boom in offshore oil and gas exploration.
With ultra-deepwater availability in 2013 almost tight, operators
have shifted their attention to the 2014 rig availability. The
ultra-deepwater market is showing significant growth opportunities
that should drive the company's earnings in the long term.
Hence, SeaDrill, like other offshore contract drilling service
Diamond Offshore Drilling Inc.
) aims to benefit from the current strong demand scenario and
intends to utilize the units in the Gulf of Mexico, Brazil and West
and East Africa.
The company currently has 19 units on order that include 7
drillships, 2 harsh-environment semisubmersibles, 5 tender rigs and
5 jackups. Its current order backlog of more than $20 billion will
see a huge boost in the near future.
However, SeaDrill's financial and operational performances face a
number of headwinds, including changes in exploration and
production spending pattern, commodity price fluctuation,
geopolitical risk, regional spending trends, competition, the
emergence of new technology and changes in economic conditions.
The company retains a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months.
DIAMOND OFFSHOR (DO): Free Stock Analysis
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SEADRILL LTD (SDRL): Free Stock Analysis Report
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