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Seadrill boosted by $4 bln drilling contract
July 25, 2012 / 8:03 AM / 5 years ago

Seadrill boosted by $4 bln drilling contract

(Adds analyst, detail)

OSLO, July 25 (Reuters) - Oslo-listed oil driller Seadrill (SDRL.OL) has won a deal potentially worth $4 billion from a major oil company for three ultra-deepwater drillships to be used in the Gulf of Mexico, lifting its shares on Wednesday.

The deal involves the drillships West Auriga and West Vela, currently under construction, and a third unit currently in operation which will be named later, Seadrill said.

The combined three-rig package involves 19 rig years, indicating a day rate of $570,000. The start-up of operations for the newbuilds are scheduled for September and December 2013.

Seadrill declined to name the major oil company.

Seadrill, the world’s biggest offshore oil driller by market value, had 46 offshore drilling units in operation during the first quarter and has ordered several more ultra-deepwater rigs, expecting to benefit from a booming market for oil exploration.

“You rarely see an operator taking in three rigs on such long contracts, so this is definitely positive,” said Danske Markets analyst Endre Storloekken, who added the fact that two of the rigs were newbuilds reduced some risk for Seadrill.

The company said earlier this year it expected day rates for ultra-deepwater rigs to rise above $600,000, and that the market was seeing rates up to $750,000 plus per day. [ID:nL5E8E87GL]

“When you get contracts as long as these you are likely to agree to a small discount. So this doesn’t change the rate range outlook,” Storloekken said.

Shares in Seadrill were up 3.6 percent at 0723 GMT, outperforming the Oslo benchmark index .OSEBX, down 0.1 percent.

“You have to remember that operating costs are fairly low in the Gulf of Mexico, so these contracts are amazing,” said Frank Harestad, analyst at Pareto.

(Reporting by Victoria Klesty and Joachim Dagenborg; Editing by Mark Potter)

((victoria.klesty@thomsonreuters.com)(+47 2293 6979)(Reuters Messaging: victoria.klesty.thomsonreuters.com@reuters.net)) Keywords: SEADRILL/

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