Chevron Thailand Exploration and Production Ltd. an exploration and production arm of integrated energy major Chevron Corporation (CVX), has entered into an agreement with Norwegian offshore driller SeaDrill Limited (SDRL) for T18 -- the tender assist rig -- valued at $235 million.
The five-year contract will commence in the first quarter of 2014, following the delivery of T15 and T16 rigs to Chevron by 2013. The tender assist rigs, which will be self-erecting and ready for operations by the fourth quarter of 2013, are being constructed at Nantong shipyard in China.
The T18 rig, which cost $135 million to SeaDrill, will have a drilling depth capacity of 20,000 feet and will facilitate drilling in water levels of 6,500-foot depth.
Founded in 1972, the Hamilton, Bermuda-based SeaDrill Limited is an offshore drilling contractor, which renders offshore drilling services to oil and gas industries all over the world. It is also engaged in engineering services, well intervention and platform drilling. As of year-end 2011, the company had ownership interests in 40 offshore drilling units on which it carries its operations.
San Ramon, California-based Chevron Corporation is one of the largest publicly traded oil and gas company in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses. Chevron, in its present form, resulted from the 2001 merger between Texaco and Chevron Corporation.
U.S.oil major Chevron Corp. is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects.
Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions. However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from any weakness in the global economy.
Chevron, the second biggest U.S. integrated oil company following ExxonMobil Corp. (XOM) holds a Zacks #3 Rank, which is equivalent to short-term Hold rating. We are maintaining our long-term Neutral recommendation on the company. SeaDrill Ltd. also holds Zacks #3 Rank.
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