Equinor Issues Integrated Drilling And Well Services Contract

Equinor ASA (NYSE:EQNR) is awarding new contracts for integrated drilling and well services on majority of the Equinor-operated fields on the Norwegian continental shelf (NCS) to Baker Hughes Incorporated (NYSE:BHGE) , Halliburton Company (NYSE:HAL) and Schlumberger Limited (NYSE:SLB) .

The contracts comprise options for five two-year extensions. The extension of the contracts is dependent on constant accomplishment of the goals for well deliveries. Initially, the contracts have been awarded for four years and have a total estimated value of about NOK 30 billion.

Equinor’s new contracts will ensure that the service supplier, rig supplier and operator have proper interactions with each other so as to simplify each ones roles and responsibilities.

The purpose of this practice is to facilitate flawless planning and execution of operations between various contributors. It will also help in drilling more wells, which will result in recovery improvement and enhance long-term operations.

The new contracts are projected to generate employment for about 2000 people on 17 fixed platforms and eight mobile rigs. The current service contracts, which expire on Aug 31, 2018, will be substituted with the new ones.

The contracts incorporate new methods of joint operations, which will provide the service suppliers with larger accountability for services than before. For successful implementation of integrated operations, support from land will be vital. For mobile units the service contracts will be connected to the rig rather than various licenses. The collaboration model has given very competent and efficient results. It has already been tested out for Johan Sverdrup Phase 1, Aasta Hansteen, Mariner and the Askeladd and Askepott Cat J rigs.

The contracts will comprise integrated drilling, cementation and pumping, drilling and completion fluids, electrical logging and completion services for well construction.

Per Baker Hughes, it will be the key drilling and well services provider for the eight rigs developing Troll, Oseberg and Grane. These three fields are considered to be the most prolific and dynamic in the Norwegian continental shelf.

In a separate announcement, Equinor announced that it had been awarded seven licenses in the 24th licensing round by the Ministry of Petroleum and Energy. Of which, Equinor will operate five and will have partner positions in the other two.

The company aims to maintain production on the NCS until 2030 and beyond at the current level. For this, the company is required to get access to new exploration acreage past the already-opened areas.

Thus, the award is in line with Equinor’s exploration strategy of securing access to newer areas on the Norwegian continental shelf as exploration in the region gets more challenging.

Price Performance

In the past three months, Equinor’s shares have gained 16.8% compared with the industry’s 8.6% rise.

Zacks Rank

Equinor currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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