Company President and CEO, Hans Helmerich commented, "We are pleased to add to our order book for fully contracted new-build rigs and to broaden the range of customers that have selected the FlexRig for their long-term drilling programs. It underscores the customer's long-term outlook for the cycle and their interest in capturing proven drilling efficiencies provided by the Company."
The Company also announced it has notified some of its new-build customers of a four-week delay in rig deliveries due to major labor disruptions caused by Hurricane Rita to one of the Company's fabrication vendors. As a result, the first FlexRig4 will be delivered to the field during late November or early December, instead of November as previously announced. The hurricane-related delays will also affect rigs scheduled to be delivered during the remainder of 2005 and the first half of 2006. The Helmerich & Payne, Inc. assembly facility located in Houston sustained no hurricane damage.
As previously announced, the only other major effect from recent hurricanes was the damage done by Hurricane Katrina to Helmerich & Payne Rig 201. Complete assessment and repair estimates of the damage are ongoing. The Company anticipates that it could be as long as nine more months before the rig is fully operational and for dayrate payments to resume. Due to the damage to Rig 201, there will likely be a slight reduction in offshore platform rig operating income for the fourth quarter of fiscal 2005 compared to the third quarter. However, the Company has committed two previously stacked offshore platform rigs for work in the Gulf of Mexico, from which the combined operating cash flow is expected to exceed the operating cash flow that was generated by Rig 201 prior to the hurricane. The newly committed platform rigs are Rig 100, which began work earlier this month, and Rig 105, which will begin operations in January 2006. As previously announced, the Company expects to record income from insurance proceeds once the repairs to Rig 201 have been completed.
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