ConocoPhillips & Ocean Rig to Drill Offshore Norway Well

ConocoPhillipsCOP entered into a Master Service Agreement (MSA) with Ocean Rig UDW Inc. The tenure of the MSA is expected to be three years with scope to get extended by a couple of years.

It is to be noted that the oil and gas explorer has inked a Drilling Program Order (DPO) - included in the MSA - with the offshore drilling contractor. Per the DPO, ConocoPhillips will likely be operating a semi-submersible rig of Ocean Rig for drilling an offshore well in Norway, with options for additional two wells. The well is expected to be drilled by Leiv Eiriksson over a period of roughly 90 days.

In the Norwegian regions of the North Sea, ConocoPhillips has significant presence. Most importantly, the company is among the largest players in the continental shelf of Norway.

Headquartered in Houston, TX, ConocoPhillips is the largest oil and natural gas explorer in the world, in terms of output of commodities and proved reserves. The company has an excellent earnings surprise history. In three of the last four quarters, ConocoPhillips surpassed the Zacks Consensus Estimate, the average positive earnings surprise being 226.9%.

Over the past year, the stock has rallied 46.7%, outperforming the industry's 8.5% gain.

However, we are concerned about ConocoPhillips' expectation for higher production and operating expenses. For 2018, the firm projects production and operating expenses of $5.7 billion, higher than $5.2 billion for 2017.

Currently, the stock carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, a few better-ranked players in the energy sector are BP plc BP , Occidental Petroleum Corp. OXY and WildHorse Resource Development Corp. WRD . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

BP managed to beat the Zacks Consensus Estimate in three of the last four quarters.

Occidental Petroleum is expected to record earnings growth of 333.7% in 2018.

WildHorse is likely to see year-over-year earnings growth of 288.4% in 2018.

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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