The Construction Contract is the result of an option that PPL Shipyard granted to Deep Drilling in January 2004 and which the latter has now decided to exercise. The contract takes effect on February 25, 2005 upon finalization of the terms and conditions of the Construction Contract. It includes an option for an additional jack-up rig with price adjustment for increases in steel price, drilling equipment package and US$ devaluation.
Construction of the jack-up rig is expected to commence in the second quarter of 2005 with delivery scheduled in the second quarter of 2007.
The Baker Marine Pacific Class ("BMC Pacific") 375 Deep Drilling Offshore Jack- Up Rig is a proprietary design developed and owned by Baker Marine Pte Ltd, a wholly owned subsidiary of PPL Shipyard. The jack-up rig is equipped with a drilling package that will enable it to drill high pressure and high temperature wells at 30,000 feet whilst operating in 375 feet of water. It has accommodation for 120 men.
Mr. T. K. Ong, Managing Director of PPL Shipyard said iaWe are pleased that Deep Drilling has decided to exercise the option to build the second jack-up rig with us. This is an endorsement of the confidence that our clients have in the design and capability of the BMC Pacific 375 design. This is the fifth jack-up rig that would be built to such design and we are expecting many more to follow."
PPL Shipyard is a rig-building yard with proven track record in the building and servicing of jack-up and semi-submersible rigs. To-date PPL Shipyard has built 26 jack-ups and 4 semi-submersibles, including two deepwater jack-up drilling rigs for Global SantaFe International.
Sinvest ASA is a public company listed in the Oslo Stock Exchange since early 2001. The company has its headquarters in Kristiansand in Norway. Its businesses include long-term financial and strategic investment in oil and offshore companies.
Barring unforeseen circumstances, SembCorp Marine expects a positive contribution to its earnings from the contract. However, this contract is not expected to have any material impact on the net tangible assets and earnings per share of SembCorp Marine for the year ending December 31, 2005.
Revenue from the contract will be recognized according to SembCorp Marine's revenue contribution policy based on the percentage of completion method measured by reference to the value of work performed relative to the total contract value over the duration of the contract.
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