Oil and natural gas driller Ensco Plc (ESV) has inked a contract with Samsung Heavy Industries, Co. Ltd. for a new DP3 ultra-deepwater drillship with superior capability based on the Samsung GF12000 hull design.
Following this order, Ensco still holds another option for a similar drillship of the DP3 series at the South Korean yard. Ensco had ordered another ultra deepwater drillship for about $645 million in April 2012, at Samsung and estimates the latest newbuild to have a comparable price tag.
Ensco’s latest addition to its fleet namely, Ensco DS 9, will be built at the Samsung Heavy Industries Shipyard in South Korea, is expected to be delivered by the fourth quarter of 2014. It will be the seventh Samsung DP3 unit in Ensco's fleet. It is capable of operating in water depths of about 12,000 feet and drill up to a maximum depth of 40,000 feet.
The newbuild, Ensco DS-9, will be equipped with retractable thrusters, improved safety and environmental features, with the potential for enhanced dynamic positioning capabilities as well as advanced drilling and completion functionality. It will also feature below-main-deck riser storage, triple fluid systems, offline conditioning capability and enhanced client and third-party facilities.
Ensco’s latest order is in response to the growing demand for ultra deepwater drillships, as the companies make new discoveries in the emerging basins worldwide. Ensco believes the dayrates will grow as the demand-supply gap widens.
The company’s constant efforts to upgrade its fleet have resulted in a contemporary fleet with standardized rig designs and exposure to crucial deepwater and jackup markets. Currently, three of Ensco’s DP3 drillships are employed through 2016 in the U.S. Gulf of Mexico, Brazil and West Africa. ENSCO DS-6, the fourth, is undergoing pre-commissioning alterations in preparation for its first well job under a five-year contract with BP Plc (BP). ENSCO DS-7 and ENSCO DS-8 are likely to be ready in the second quarter of 2013 and third quarter of 2014, respectively. These are likely to boost the company’s earnings going forward.
Ensco holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain a Neutral rating on the stock.
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