SeaDrill Unit Clinches Twin Contracts From ConocoPhillips

Offshore drilling contractor SeaDrill Limited (NYSE:SDRL) recently declared that its affiliate, North Atlantic Drilling Limited (NADL), has been awarded contracts for its jack-ups – West Elara and West Linus – from ConocoPhillips (NYSE:COP) . Under the 10-year contracts, the rigs are expected to operate at the Ekofisk field, offshore Norway.

North Atlantic is expected to receive an additional backlog of $1.4 billion, excluding performance bonuses, from the contracts.

Investors should know that the new contract for the West Elara jack-up will become effective from Oct 2017. Up to Mar 2020, the rig will have fixed day rates and market indexed applicable rates afterward (through Oct 2027).

The contract for the West Linus jack-up will extend from May 2019 to the end of 2028. The rig will operated at market indexed rates.

Headquartered in London, SeaDrill is one of the leading offshore drilling contractors in the world. The company is expected to report first-quarter earnings on May 25, 2017. The Zacks Consensus Estimate for the quarterly earnings is of a loss of 1 cent per share.

SeaDrill has a good earnings surprise history. The company beat the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 34.24%.

However, the company’s price performance is not impressive. In the last six months, SeaDrill’s stock underperformed the Zacks categorized Oil & Gas-Drilling industry. During the aforesaid period, SeaDrill’s shares fell more than 67% as against 4.3% increase for the broader industry.

SeaDrill carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector include Antero Resources Corporation (NYSE:AR) , Cenovus Energy Inc. (TO:CVE) and Energy Transfer Equity, L.P. (NYSE:ETE) . Antero Resources and Cenovus sport a Zacks Rank #1 (Strong Buy), while Energy Transfer carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources’ earnings beat the Zacks Consensus Estimate in all the prior four quarters with an average positive earnings surprise of 239.10%.

Cenovus Energy’s earnings surpassed the Zacks Consensus Estimate in two of the prior four quarters with an average positive earnings surprise of 74.89%.

Energy Transfer is expected to witness year-over-year earnings growth of 35.00% in 2017.

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