Rowan Amends Contract for Gorilla VII


Candian Superior Rowan Gorilla V
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Rowan Companies reports that its wholly-owned subsidiary, British American Offshore Limited and Tuscan Energy (Scotland) Limited have amended the Rowan Gorilla VII drilling and production contract for the Ardmore Field development.

The two companies have agreed to a temporary reduction in the day rate for a five-month period as a result of reduced production revenues due to well bore and geological difficulties encountered in the first three wells. During the period of February 1, 2004 to June 30, 2004, British American has agreed to reduce the floating day rate based on a specified number of barrels of oil at the daily Brent crude price, to a fixed day rate. During the five-month period, drilling revenues are expected to be reduced by approximately $4.5 million to $7.5 million. After June 30, 2004, the day rate will revert to the floating day rate as specified in the original contract. British American has also agreed to a delay in the payment of day rate charges for the period January 1, 2004 to March 31, 2004 until proceeds from first production from the Ardmore Field are received after the recompletion of an existing well.

D. F. McNease, President and Chief Executive Officer, commented, "At the time this contract was signed, its term was to be determined by the economic life of the Ardmore field. To date, as a result of high oil prices, we have realized a significantly higher day rate from the contract than was anticipated. We have agreed to modify our contract to assist in attempting to extend the field's life."
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