SMM

SMM: secures its 7th drillship contract worth US$806.4m from Sete Brasil. Pricing is on par with avg drillship price for its order of 5 drillships from Sete Brasil in Aug ‘12, and above the US$792.5m pricing for one drillship order also from Sete Brasil back in Feb ’12. All the drillships will be built based on the Jurong Espadon design, which represents the next generation of high spec drillships with advanced capabilities for operational efficiency and ultra-deepwater operations. It will be capable of operating at 10,000 ft water depth and drilling to depths of 40,000 ft with accommodation facilities for a crew of 180 personnel. This order is scheduled for delivery no later than 3Q16. The previous 6 drillship orders have deliveries ranging from 2Q15 to 4Q19. Ytd, SMM has secured approx $10.1b in new orders, and net orderbook stands at approx $13.1b, with slightly more than half from Petrobras. The stock trades at 15.2x P/E. The majority of the Street continues to rate the stock positively, with 16 Buys, 7 Holds and 1 Sell. Consensus TP is $5.40.