Diamond Offshore (DO) Secures Rig Contracts Worth $360M
Diamond Offshore Drilling DO secured a new contract with Serica Energy in the United Kingdom and a contract extension with a subsidiary of BP in the U.S. Gulf of Mexico. The two contracts represent $360 million of additional backlog for the company.
The two-year contract extension with a subsidiary of BP for the Ocean BlackLion drillship, in the U.S. Gulf of Mexico, represents $350 million of additional backlog. The contract is scheduled to start in September 2024, in continuation of the rig’s current program. The aforementioned drillship has been working for BP since September 2022.
Diamond Offshore’s new contract with Serica Energy for the jack-up semi-submersible Ocean Patriot drillship represents $10 million of additional backlog. The contract includes the drilling of two plug and abandonment (P&A) wells in the U.K. North Sea and is expected to begin in March 2024. The estimated duration of the program is approximately 60 days.
The company also won a 35-well P&A contract with TAQA Bratani Limited in the U.K. recently. The program is estimated to continue for three years.
According to Diamond Offshore, these recent awards demonstrate the continued strength of the drillship market and the positive trends seen in the moored floater market in the U.K. North Sea. The company representative also commented on the exceptional work executed by their crew members in the region.
Zacks Rank and Key Picks
Currently, DO holds a Zacks Rank #4 (Sell).
Investors might want to look at some better-ranked stocks in the energy sector, such as Oceaneering International OII, Repsol REPYY and Harbour Energy HBRIY. While both Oceaneering International currently sports a Zacks Rank #1 (Strong Buy), Repsol and Harbour Energy holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Oceaneering International is a market-leading supplier of offshore equipment and technology solutions to the energy industry. The company has projected an increase in free cash flows for 2024. The bright outlook is supported by the growing market demand for its mobile robotic forklifts and underride vehicles.
Repsol is a global multi-energy company, involved in exploration and production activities as well as refining and marketing petroleum products. The company is also actively involved in transitioning toward cleaner and more sustainable energy solutions. Recently, it announced the expansion of its network of renewable fuel refilling stations in Europe, demonstrating its commitment to a sustainable energy model.
Harbour Energy is a leading independent oil and gas company, primarily involved in upstream operations. The recently announced acquisition of Wintershall Dea asset portfolio is expected to increase HBRIY's estimated production. The company has also done well in reducing its debt in the past year.
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