Hercules Offshore, Inc. announced the execution of an agreement to acquire the offshore drilling rig Ben Avon (250' ILC) from a subsidiary of KCA Deutag. The purchase price is $55 million in cash. The Ben Avon is a LeTourneau Class 82 SD-C self-elevating drilling rig registered and flagged in Panama. Subject to completion of certain closing conditions, the Company expects the acquisition to close by late-March 2013.
Hercules Offshore also announced that it has signed a Letter of Agreement (LOA) for a three-year rig commitment with Cabinda Gulf Oil Company Limited (CABGOC) for use of the Ben Avon. The Company expects to generate total revenue of approximately $119 million over this three-year period under the contract. Subject to the execution of a mutually agreed drilling contract, the Company expects the rig to commence work as early as May 2013.
Chief Executive Officer and President of Hercules Offshore John T. Rynd stated, "We are very pleased to be able to acquire the Ben Avon and execute an LOA with CABGOC. With this transaction, we continue to opportunistically expand our international presence and scale, add significant long term backlog and cash flow, and reaffirm our commitment to CABGOC, a key global client, at economics that are beneficial for all parties. The LOA for the Ben Avon replaces our prior contract with CABGOC for the Hercules 185, at a substantial improvement in dayrate and provides for a new full three year term. The Ben Avon is a well-maintained rig that recently completed an extensive five year special survey. Given the good condition of the rig, and its close proximity to the drilling location, we expect to spend only minimal additional capital to get it on contract."
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