Seadrill Limited SDRL, an offshore drilling contractor based in the United States, has secured a contract from Petrobras (PBR), the Brazilian state-owned energy firm, for its West Tellus drillship. The contract involves work for the Sépia and Atapu fields in the Santos Basin, off the coast of Brazil.
Details of West Tellus’ Contract
Seadrill won the drillship contract following a rigorous bidding process. The contract has a duration of 1,095 days and is expected to contribute approximately $498 million to its order backlog. The total contract value includes additional services but excludes the mobilization fee. The company needs to pay an additional $41 million toward mobilization fees. Additionally, the contract includes an option to increase the duration by another 305 days.
Details of West Jupiter’s Contract
Furthermore, SDRL mentioned that its ultra-deepwater drillship, West Jupiter, has been contracted by Petrobras for work offshore Brazil. Seadrill won the contract following a competitive bidding process. The contract has a duration of 1,095 days. The total value of the contract is estimated to be $493 million, excluding the mobilization fee of $31.5 million. The contract value covers all additional services.
Impact of New Contracts
SDRL stated that the contract for West Jupiter strengthens its relationship with a key client in the deepwater market. Furthermore, the new contracts add approximately $1 billion to its order backlog thereby, potentially raising its earnings and free cash flow in 2026.
Seadrill currently operates six drillships in Brazil, which positions the offshore driller in a key deepwater market. The company’s long-term contracts in this resilient deepwater market ensure steady earnings and provide a clear vision of its potential earnings.
SDRL’s Zacks Rank and Key Picks
SDRL currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector areTechnipFMC plc FTI, Oceaneering International OII and Nine Energy Service NINE. TechnipFMC plc and Oceaneering Internationalcurrently sport a Zacks Rank #1 (Strong Buy) each, while Nine Energy Service carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The company’s total backlog witnessed a high of $14.7 million in the third quarter of 2024, indicating an 11.1% increase from the previous year’s level. This growing backlog ensures strong revenue growth for FTI.
Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading offshore equipment and technology solutions provider to the energy industry. The company's proven ability to deliver innovative, integrated solutions supports ongoing client retention and new business opportunities, ensuring steady revenue growth.
Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. The company operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the need for NINE’s services is anticipated to increase, which should position the company for growth in the long run.
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