North Atlantic Drilling Ltd (NYSE: NADL) is having an incredible morning in the market this morning, and for good reason. The company announced that it has been awarded a key contract, causing excitement among investors and leading to massive gains in the value of the stock. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (8:45), NADL is trading at $1.63 per share after a gain of $0.90 per share (121.77%) thus far today.
NADL Secures 10-Year Contract
As mentioned above, North Atlantic Drilling is having an incredibly strong day in the market today after it announced that it has secured 10-year contract awards. The awards surround the jack-ups West Elra and West Linus. The contract awards were secured with Conoco Phillips Skandinavia for work in the Greater Ekofisk Area. Excluding performance bonuses, the backlog is worth $1.4 billion.
Under the terms of the agreement, NADL has agreed to a dayrate adjustment on the existing West Linus contract, effective from April 2017. This will result in a reduction of approximately $58 million from the current backlog. The new West Elra contract is expected to start on October 2017 and includes a period of fixed dayrates until March 2020, contributing approximately $160 million to the contract backlog.
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on NADL. In particular, we're interested in following these contracts and the revenue generated by them, as well as following the company through future growth endeavors. We'll continue to follow the news closely and bring it to you as it breaks!
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