SeaDrill Limited Gets Contract for Newbuild West Saturn
On Aug 8, Norwegian offshore drilling contractor SeaDrill Limited (SDRL), along with its partner firm Field Offshore Design Engineering Nigeria Limited, announced that it has secured employment for its newbuild West Saturn. SeaDrill has entered into a contract with a subsidiary of Exxon Mobil Corp. (XOM), Esso Exploration and Production Nigeria Limited, for the ultra-deepwater drillship.
The contract has an initial term of two years with a one-year extension option. The total revenue potential of the contact is estimated at about $497 million, which includes mobilization costs.
Per the contract, West Saturn will work for the ERHA North Phase 2 project in Nigeria. It would be SeaDrill’s third rig in the region, following the West Jupiter and West Capella. The drillship, with an expected delivery in September, would be the sixth unit to start operations for SeaDrill in the past 12 months.
Hamilton, Bermuda-based SeaDrill is involved mainly in worldwide offshore drilling services. The company carries out operations under three segments, namely, Floaters, Jack-up Rigs and Tender Rigs. The company has, however, not fared well in the past few quarters in terms of earnings. For the trailing four quarters, the company has an average negative surprise of 12.56%.
SeaDrill is expected to report its second-quarter results on Aug 27 and the Zacks Consensus Estimate for the quarter is currently pegged at 76 cents per share.
SeaDrill carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. market in the next one to three months.
Meanwhile, one may consider better-ranked players in the same sector such as Patterson-UTI Energy Inc. (PTEN) and Pioneer Energy Services Corp. (PES). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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