Ezion cements $93.5M service rig contract

This latest deal to deploy a service rig in North America may boost multi-year EPS, says DMG.

The Singapore-listed offshoring company secured a four-and-a-half year contract for a Sonda de Campeche field rig for major oil corporation. The rig is expected to be deployed in the third quarter of the year.

As a result of the new contract, DMG foresees upward revisions for its own FY12-13F EPS estimates by 3% and 9%, respectively.

Here's more from DMG:

New US$93.5m contract is positive. Ezion announced that it has secured a US$93.5m charter contract to deploy a service rig in North America. We view the latest contract win positively. Based on our preliminary estimates, assuming US$8m net profit pa, the service rig contract could lift our FY12-13F EPS estimates by 3% and 9% respectively. We keep our FY12-13F EPS estimates unchanged pending an update with management.

Maintain BUY with a TP of S$1.00 based on 10x FY12F EPS. Ezion is our top pick in the small/mid-cap oil & gas sector given its strong EPS growth. We expect FY12F core net profit to grow 44% YoY.

Details of charter contract: Ezion has secured a contract from a national oil major to deploy a service rig in North America. The value of the contract is estimated at US$93.5m and the contract duration is for four and a half years. We estimate the rig dayrate at US$59,365 (assuming 350 charter days pa). The rig is expected to be deployed in 3Q12 in the field of Sonda de Campeche after its refurbishment and upgrade work.

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