Why Sembcorp Marine's US$596m rig deal is not surprising news

Analysts had seen it coming.

According to Phillip Securities, Sembcorp Marine announced that it has secured an order worth US$596mn to build an ultra-high specification jack-up rig from Noble, with option for an additional unit for use in the UK sector of the North Sea.

Scheduled for delivery in 1Q16, the rig will be constructed based on the proven Gusto MSC CJ70 design and in line with an enhanced version of Statoil’s “Cat J” specifications.

Here's more from Phillip Securities:

The CJ70 jack-up rig order from Noble was not unexpected, as potential newbuild order was first highlighted in Upstream on 25 April 2013.

We believe that this has already beenpriced into its current share price. We expect Sembcorp Marine to reap decent margins from this project as this is a repeat design (the group secured orders from Seadrill for two similar CJ70 rigs in 2007 and 2011).

The rig has secured a 4-year contract with Statoil at the Mariner project in the UK North Sea with an estimated value of US$655mn (including mobilization).

The charter contract is expected to begin in 3Q16.

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