Ensco's subsidiaries has finalized a fixed-price shipyard construction contract with Keppel FELS in Singapore for construction of two new ultra-premium harsh environment jackup rigs. Including commissioning, system integrated-testing and project management, the construction cost is expected to be approximately $230 million per rig. The shipyard construction price for both rigs is approximately $440 million. The first rig is scheduled for delivery in the second quarter 2013 and the second rig in fourth quarter 2013. The shipyard contract also includes options for two additional jackups of the same design at similar terms that may be exercised by August 2, 2011.
The new jackup rigs will be enhanced versions of the KFELS Super A design capable of operating in water depths up to 400'. The unique design features of the rigs significantly increase the area of operability in the Central North Sea and other harsh environment regions with industry-leading capacities and efficiencies.
With high-temperature, high-pressure equipment, a significantly improved cantilever envelope, 2.5 million pound quad derrick, fully automated hands-free offline pipe handling systems, ultra-high capacity jacking and fixation systems,150 person quarters and strict noise and ergonomic standards, these rigs feature equipment and capabilities previously found only in the largest ultra-harsh environment jackup fleet and set a new standard in the harsh environment category. These extremely capable and versatile rigs offer customers unprecedented value through increased drilling efficiencies for the most demanding large multi-well platform programs, ultra-deep gas programs or ultra-long reach wells up to 40,000' total drilling depth in oil and gas regions throughout the world.
Senior Vice President Mark Burns stated, "We continue to execute on our long-established strategy of high-grading our jackup fleet by investing in newer equipment. During the past year, we acquired ENSCO 109, a KFELS Super B design jackup that was delivered in 2008. Given the rise in jackup utilization and our positive outlook for future demand, we believe that new construction is now the best option to further high grade our fleet with state-of-the-art equipment.
"We look forward to working with Keppel FELS on this important project. Our companies have a longstanding and successful relationship and our capital projects team is already in place managing the construction of our three remaining ENSCO 8500 Series® ultra-deepwater semisubmersibles that will be delivered through 2012."
For the new jackups, Ensco negotiated very attractive payment terms with 20% due at contract signing and the remaining 80% payable upon delivery, all of which is anticipated to be paid with available cash.
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