Noble has secured a Letter of Intent ("LOI") with a subsidiary of Royal Dutch Shell plc for the 12,000 foot ultra-deepwater semisubmersible Noble Jim Day to operate in the U.S. Gulf of Mexico. Under the terms contemplated by the LOI, the effective date of the commitment would be February 15, 2011 and the contract would extend through January 31, 2012. The LOI contemplates that Noble would receive a standby rate if Shell is unable to secure drilling permits as follows:
Beginning the sooner of August 1, 2011 or Shell securing a drilling permit for use of the unit, the operating dayrate would be $485,000 per day. During the operating period, the unit would be eligible for a performance bonus of up to 15 percent of the dayrate. The LOI is subject to execution of the drilling contract, although the parties have agreed to a base form of contract and certain of the particular modifications for this work.
"We are extremely pleased to see the Noble Jim Day be awarded this LOI so that it can go on the payroll and earn a dayrate effective from mid-February," said David W. Williams, Chairman, President and Chief Executive Officer, Noble Corporation. "This is an extremely high quality rig and there was significant customer interest, however, other opportunities that would have required a mobilization out of the U.S. Gulf would have precluded us from being able to begin recognizing revenue until much later in the year. Furthermore, the terms of the LOI ensure that under the contract we would earn a full operating dayrate beginning no later than August 1st with potential upside if Shell is able to secure a drilling permit sooner. And the short-term nature of the commitment positions us well if dayrates increase as expected in the latter half of the year."
In addition, Noble also announced that the standby rates on three of its other units under contract with Shell in the U.S. Gulf of Mexico will also increase as follows:
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