Sembmarine's 7th drillship contract from Sete Brasil signals more orders to come

Delivery delays by Brazilian yard, EAS, is a blessing for Sembmarine.

Sembmarine has just secured its seventh drillship contract from Sete Brasil worth US$806.4m or delivery not
later than 3Q16.. CIMB believes that delays faced by Brazilian yard, EAS, could lead to more rig contracts for Sembmarine from now till 2013, as a stop-gap measure by Petrobras.

Here's from CIMB:

We were not entirely surprised by this order as it is within the US$6bn orders that Sembmarine is bidding for. This award has lifted its YTD wins to S$9.8bn (Petrobras: S$7.4bn, non-Petrobras: S$2.4bn).

We keep our order target of S$4.5bn for 2013. We believe the drillship could be used by Sete Brasil to compensate for delivery delays by Brazilian yard, EAS.

To recap, EAS was the first yard to be awarded seven drillship orders by Petrobras in 2011 in the national oil company’s tender of 28 rigs. However,
its brand new facility has been suffering from teething problems and could miss its delivery targets of 2014-17.

We expect similar local-content requirements (about 55%) for this contract and see the potential for margin expansion in 2015 as Sembmarine is expected to concurrently execute at least three drillships in Brazil.

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