Devon Energy Signs Long-Term Contract for Gulf of Mexico Drilling Rig.

Oil and gas explorer Devon Energy Corp. said Monday it signed a long-term contract worth at least $690 million for a semi-submersible drilling rig.

The contract with Seadrill Offshore AS for the West Sirius drilling rig has an initial length of four years and an option for Devon to extend to five or six years. The rig can drill to 37,500 feet in up to 10,000 feet of water.

Devon plans to use the rig, which is under construction and scheduled for delivery in the second quarter of 2008, in the Gulf of Mexico.

It’s the second such contract Devon has struck recently. It also agreed to a four-year deal on Diamond Offshore’s Ocean Endeavor deepwater drilling rig, set to arrive in the second quarter of 2007.

“This second long-term rig agreement reflects our growing confidence in the value of Devon’s deepwater Gulf of Mexico position,” Stephen J. Hadden, senior vice president of exploration and production, said in a statement.

Devon shares rose 30 cents to $65.05 in morning trading on the New York Stock Exchange.