Oil and gas companies have increased their level of activity in harsh environment and arctic areas considerably during the last years. This has translated into a growth in demand for high specification rigs for operations and a tight supply demand balance in such areas. Continued strong market fundamentals including the recent exploration successes in harsh environment create a sound basis for further growth in the North Atlantic region. In addition to demand for new rigs, there is also a need for replacement of older rigs.
In response to this development North Atlantic Drilling has entered into a turnkey construction contract with Jurong Shipyard in Singapore for the construction of a new harsh environment semisubmersible drilling rig. The new rig will be of a Moss CS60 design, N-Class compliant and be fully winterized to meet the harsh and demanding weather conditions in the North Atlantic areas. Maximum water depth will be 10,000 feet with a maximum drilling depth of 40,000 feet. Further, the rig will be outfitted with both DP3 dynamic positioning systems and complete anchor handling capabilities. The rig will have accommodation capacity for up to 150 people in Norway, whereas internationally the capacity will be 180. In order to meet the highest safety and operational standards, the rig will be outfitted with a six ram blow out preventer (BOP) stack and have the capacity for storing and handling of a second BOP.
The new rig is scheduled for delivery in the first quarter 2015 at the latest. Total estimated project costs for the new rig, including a turnkey contract with the yard, project management, drilling and handling tools, spares, capitalized interest and operations preparations, is estimated to be approximately $650 million. Twenty percent of the yard price is payable at contract signing, and the remaining 80 percent at delivery. The first installment has been financed by proceeds from the private placement which was completed on March 27, 2012.
Alf C Thorkildsen, Chief Executive Officer in North Atlantic Management AS and Chairman of North Atlantic Drilling Ltd. commented: "North Atlantic Drilling was established in February last year with a clear ambition of building the leading harsh environment offshore drilling company. Since this incorporation, the underlying market for drilling services in such areas has shown a tremendous development creating opportunities for further growth. With this newbuild order, we are able to continue developing our growth strategy and utilize a unique opportunity to generate solid returns for our shareholders. We believe the market for modern advanced rigs will continue to develop favorably and offer attractive contracting opportunities."
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