Sembcorp Marine Wins $247 mln Rig Contract

April 6, 2009
Shiyin Chen and Kyunghee Park, Bloomberg

Sembcorp Marine Ltd., the world’s second-largest maker of oil rigs, surged to the highest in almost six months in Singapore trading after winning a $247.3 million order from SeaDragon Offshore Ltd. of Norway.

The company will build, equip and complete a semi- submersible drilling unit for SeaDragon by the end of 2010, according to a statement to the city’s stock exchange. SeaDragon also has an option for an additional unit, Sembcorp Marine said.

Depleting reserves and long-term energy demand are encouraging oil companies, including Brazil’s Petroleo Brasileiro SA, to look for new fields in deeper waters. Crude price has advanced 20 percent this year.

“Our preferred pick in the Singapore offshore and marine sector is Sembcorp Marine given our positive bias on deepwater investment thesis supported by sustained capital expenditure by oil majors,” JPMorgan Chase & Co. analysts, led by Ajay Mirchandani, wrote in a note dated April 4. The brokerage has an “overweight” rating on the stock.

The order will add to earnings this year and in 2010, Semb Corp Marine said, without giving details. Sembcorp Marine gained as much as 11 percent to S$2.19 and closed 9.1 percent higher at S$2.15, the highest since Oct. 14. The stock is the second-best performer on the Straits Times Index.

The hull of the semi-submersible will be built at a Russian shipyard and will arrive at Sembcorp Marine’s Jurong Shipyard unit no later than this month, the company said. The drilling rig is charted to Petroleos Mexicanos for five years.

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