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JV with SeaDrill helps GIS maintain its bullish outlook

Satyendra Pathak
Gulf International Services (GIS), the largest listed service group in Qatar with interests in a broad cross-section of industries, has maintained its bullish outlook following the announcement of joint venture with SeaDrill, QNB Financial Services (QNBFS) said in its latest report.
According to QNBFS, the positive newsflow on the drilling front and signs of stabilisation in the other segments should continue to help the stock going forward.
GIS, which deals in industries ranging from insurance, re-insurance, fund management, onshore and offshore drilling, helicopter transportation, and facilities management, recently announced that its 100 percent-owned subsidiary GDI has formed a 50/50 JV with SeaDrill known as GulfDrill.
GDI is not required to contribute any capital to the JV, it said.
“The firm disclosed the value of the initial well-based contracts at QR2.39 billion. Moreover, the contracts include single individual well-based options that could potentially add another QR2.55 billion. We feel this news adds further validation to our bullish thesis on GIS. We maintain our outperform rating on the stock,” QNBFS said in the report.
GulfDrill is formed to service the Qatar Petroleum North Field Expansion drilling programme and support the execution of the drilling contracts which have been awarded to GDI, it said adding the JV will subcontract GDI to mobilise and manage the rigs in line with the drilling contract requirements.
While the JV will obtain rigs directly from SeaDrill, it said, any additional rigs which may be required will be sourced from an unrelated third-party shipyards.
Total contract value is estimated at QR2.39 billion including the mobilisation income. “However, the contracts include single well-based options which could add up to an estimated 13.7 cumulative years of term and an additional contract value of QR2.55 billion,” the report said.