Songa Offshore's 100% owned subsidiary, Songa Rig AS, has received and accepted a Letter of Award (LOA) from Statoil for two new build "Cat-D" semisubmersibles with firm terms of 8 years each, and options that could extend this period to 20 years. The firm part of the contract has an aggregated revenue value of approximately USD 2.5 Billion, inclusive of mobilization, with a higher contract value upon program commencement due to escalation provisions taking effect from 2011. Statoil has awarded the contract for the two new build Cat D rigs on behalf of the participants in the Troll-license.
Statoil has an option to award contracts for two additional rigs to Songa.
Mobilization of the units to Statoil will take place in direct continuation of the rigs' delivery from Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME) in 1Q and 3Q 2014. The fixed price, inclusive of yard's project management and commissioning, is USD 565 million per unit with 20/80 payment terms staggered by delivery schedule. The construction cost is expected to be funded from a combination of ongoing cash flows in addition to bank debt.
Asbjørn Vavik, CEO of Songa Offshore SE, said, "We are pleased to secure a contract for two new build high specification semisubmersibles for mid-water harsh environment in the Norwegian North Sea, which is consistent with our strategy of fleet renewal. We consider this an excellent opportunity to further strengthen our relationship with Statoil and manifest our position as a leading provider of offshore rigs for the Norwegian North Sea region. The contract value for the fixed 8 years contracts represents a significant increase in our backlog and earnings visibility."
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