SMM

SMM: has secured a US$218.5m contract to build a jack-up rig from Gulf Drilling. The rig is scheduled for delivery in 1Q13. The rig is based on PPL Shipyard’s Pacific Class 400 series, the latest generation of high-specification jack-up rigs capable of operating in water depths of 400 ft and drilling to depths of 35,000 ft. The rig is also specially customised for the intended project and has accommodation for 150 personnel with full hotel services. This jack-up rig will be the most technologically advanced drilling rig operating in Qatar.
While there is some level of customisation for the rig, the contract value represents an improvement in pricing, further indicating that demand is picking up.

This latest contract brings SMM’s YTD order wins to $2.72b, compared to $3.7b for the whole of FY11.
The Street remains positive on SMM, with 21 Buys and 4 Holds, with consensus avg TP at $5.89.