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Seadrill, Husky in Rig Deal

Zacks Equity Research

Norwegian oilfield service firm Seadrill Limited (SDRL) received a contract for newbuild rig West Mira from Husky Energy (:HSE), also known as Husky Oil Operations. The contract – that extends for a period of five years – is estimated to have a revenue potential of $1.18 billion.

West Mira – which will be deployed in the waters of Canada and Greenland – is being set up at the Hyundai Samho Shipyard in South Korea. The semi-submersible rig is capable of exploration in harsh environments and deep water levels of up to 10,000 feet.

The drillship’s features include DP-3 (dynamic positioning) and 12 point mooring capability along with the potential of two six ram blowout preventers and a load path of 1,000 ton capacity.

West Mira is slated to be delivered in the last quarter of 2014, with operations expected to commence in the second quarter of 2015. This will be Seadrill Limited’s second rig operating in Eastern Canada.

Seadrill Limited management remains highly upbeat regarding this contract, which reflects the company’s reputation as an efficient offshore drilling contractor.  

Based in Hamilton, Bermuda, Seadrill Limited renders offshore drilling services, which include exploration, completion and maintenance of offshore wells; production and well maintenance; and well services to customers worldwide.  As of June 30, 2012, the company’s fleet included 43 offshore drilling units and 18 other units under construction.

Seadrill Limited will announce its third-quarter 2012 results on November 26, 2012. The Zacks Consensus Estimate for earnings is 68 cents, on revenue of $1,115 million.

Seadrill Limited currently retains a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.

We believe that Seadrill, like other offshore contract drilling service providers Ensco Plc (ESV) or Diamond Offshore Drilling Inc. (DO) aims to benefit from the current strong demand scenario and intends to utilize the units in various offshore locations across the globe.

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