Why you shouldn’t be concerned with SeaDrill’s exposure to Gulf of Mexico drilling permit delays.


Deepwater oil driller SeaDrill (SDRL) has the least exposure to the US government’s drilling permit delays amongst ultra-deepwater drillers.  They only have one rig operating in the Gulf of Mexico (West Sirius pictured).


Rig type: Semi-submersible

Name: West Sirius

Generation/type: 6th-BE

Built: 2008

Water depth (feet): 10,000

Drilling depth (feet): 35,000

Location: Gulf of Mexico

Client: BP

Current contract: Start – July 2008; Expire – July 2014; Dayrate – $474,000

Previous contract: none

Source: SeaDrill Fleet status report 4Q2010 (http://www.seadrill.com/investor_relations/fleet_update_report )

SeaDrill is paid by BP $474,000 per day regardless if they are allowed to drill or not.  However, oil companies will eventually terminate their contracts with drilling providers (like SeaDrill) if the US government doesn’t issue permits in a manner timely enough to profitably drill for oil.  The good news is that if the US government is slow to issue permits to drill, then SeaDrill is exposed the least amongst the companies mentioned in the article link above.  Transocean (RIG) has the most exposure to the Gulf of Mexico deepwater permit delays.

The West Sirius should bring in $173 million dollars in revenue per year for SeaDrill per its contract with BP.  I couldn’t find the cost to build the West Sirius in a simple Google search.

Most of SeaDrill’s rigs are in Southeast Asia waters.

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Published in: on March 1, 2011 at 9:26 pm  Leave a Comment  

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