SMM

SMM: officially announced that it secured a US$568m contract to build a harsh-environment ultra-deepwater semi-sub rig from North Atlantic Drilling, a 74%-owned subsidiary of Seadrill. Delivery is scheduled for 1Q15. The rig is capable of operating at a water depth rating of 10k ft with a max drilling depth of 40k ft.

This isn’t new news, as analysts had already talked about this order last wk, with the difference between the previously reported contract value of US$650m vs actual value of US$568m, due to exclusion of the value of the rig’s drilling pack.
Nevertheless, the pricing is still significantly better than the US$450-500m for typical semisubs, and reflective of the higher specs of the vessel.

Ytd, SMM has secured 4 contracts (1 jackup, 2 semis, 1 drillship) worth a combined $2.45b. Therefore at this yr’s 1Q mark, SMM has already secured 66% of last yr’s total order wins of $3.7b.

KE Research believes that the overall pricing environment has picked up. The house maintains at Buy with a recently upgraded TP of $6.21.