BP Inks 5-yr Deal with Ensco
BP Plc (BP) has hired a new dynamically positioned drillship, Ensco DS- 6, under a five-year agreement with offshore drilling service provider, Ensco Plc (ESV). The British major will pay approximately $522,000 a day, plus cost adjustment, with two one-year extension options.
The rig is part of Ensco’s Samsung DP3 drillship series, which is capable of drilling at a depth of 10,000 feet. The unit can be customized to drill further at a depth up to 12,000 feet under water. Manufactured at Samsung Heavy Industries’ shipyard in South Korea, Ensco DS- 6 is currently undergoing BP-requested adjustments at the Keppel Fels Shipyard in Singapore and is expected to start-up the contract in late fourth quarter 2012.
The DPS-3 certified series is well equipped with six ram 15,000 psi blowout preventers (BOPs), two million pound hook load, 6,000-barrel active fluid systems, enough storage and deck space, and can fit in 200 persons. The U.K. major’s specifications boast double-blind shear rams for the BOP of the Ensco DS-6 rig.
Upon completion of the modifications, the drillship will be mobilized to its initial drilling site in order to complete acceptance testing before commencing drilling activities. BP will finance its specified modifications as well as mobilization fee and special standby day rate. The standardized design of Ensco’s Samsung DP3 drillship series is expected to boost BP’s deepwater oil output over the coming days as the way to on-shore fields has become narrow.
For Ensco, the deal will not only generate $1 billion revenue backlog but will enhance its active ultra-deepwater fleet size to 10 rigs. This also gives Ensco the latest ultra-deepwater fleet worldwide with an average age of only two years.
We believe that the U.K.’s second largest oil company is making efforts to focus on a string of upstream activities. This mainly includes in the high margin areas like the Gulf of Mexico, Angola, the North Sea, Brazil, Australia and India.
We maintain our long-term Neutral recommendation for BP, which retains a Zacks #3 Rank (short-term Hold rating).
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