Rowan's (RDC) Drillship Receives Contract From Exxon Mobil
Zacks Investment Research | Jun 11, 2018 08:08AM ET
Rowan Companies plc’s (NYSE:RDC) R-Class drillship — Rowan Relentless — has been hired by Exxon Mobil Corporation (NYSE:XOM) .
The award, related to the drilling of a prospect in the US Gulf of Mexico, is expected to begin in September 2018 and will continue for 80 days. Subsequently, Rowan’s drillship would drill four one-well, priced options.
Recently, Rowan’s new offshore drilling entity — ARO Drilling —commenced activities. The entity is jointly owned by the company and Saudi Aramco, each holding a 50% stake. ARO will be able to participate in the growing offshore drilling market of Saudi Arabia. Moreover, Rowan has the largest number of jack up fleet among all the drillers. As of May 1, 2018, the company’s drilling fleet comprised 23 jack-up rigs and four ultra deepwater drillships. The new entity provides visible earnings growth over the next 15 years.
There are 161 rigs in the global ultra deepwater fleet but only few have the high specifications for today’s demanding requirements.7th Generation rigs are distinct from earlier generation rigs. Rowan’s drillships are superior among 7th Generation rigs and are exceptionally positioned to provide the key features preferred by the market.
Moreover, rising oil prices are anticipated to push up the demand for rigs. However, dayrates are not expected to improve until 2019. Marketed utilization is required to return to 85% for pricing to improve steadily.
Price Performance
In the past three months, Rowan’s shares have gained 35% compared with the Zacks Investment Research
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