The U.K.-based offshore driller Ensco plc (ESV) has inked a contract with Samsung Heavy Industries, whereby the latter will deliver a new ultra deepwater drillship at a cost of about $645 million.
The advanced technology-enabled drillship will be built in the Samsung Heavy Industries shipyard, located in Geoje, South Korea and will be the sixth Samsung DP3 drillship in the offshore driller’s fleet. The drillship, expected to be ready by the third quarter of 2014, will have the potential to drill in water depths of 12,000 feet and a total vertical drilling depth of 40,000 feet.
The contract also offers options for construction of two more drillships of similar design. ENSCO DS-8, the new drillship, will feature retractable thrusters, improved safety and environmental features, with the potential for enhanced dynamic positioning 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.
Currently, Ensco’s fifth drillship – Ensco DS-7 – is under construction in South Korea and is slated for completion in the latter part of 2013. Ensco’s fourth drillship – Ensco DS-6 – is currently engaged by BP Plc (BP) and is undergoing BP-requested adjustments at the Keppel Fels Shipyard in Singapore, with the start-up slated for late fourth quarter 2012. BP has contracted the drillship for five years and will pay approximately $522,000 a day, with two one-year extension options.
Three of the active DP3 drillships from Ensco’s fleet are currently employed in the U.S. Gulf of Mexico, Brazil and West Africa till 2016.
Ensco’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. Furthermore, the start-up of Ensco 8505, 8506, DS-6, and 7000 as well as full year revenue from Ensco 8503 are likely to boost the company’s 2012 earnings.
Per the Zacks Consensus Estimate, earnings per share are $5.51 and $6.81, for 2012 and 2013, respectively. The estimates signify a growth of 81.8% in 2012 and 23.6% in 2013, on a year-over-year basis.
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 our Neutral recommendation on the stock.
To read this article on Zacks.com click here.
Zacks Investment Research
