Rig 1, a 2000-hp conventional inland barge, will be reactivated for an estimated cost of $5.7 million against a one-year term contract with contract revenues of approximately $10.5 million. Approximately $2.3 million of the cost to reactivate the unit will be capitalized with the remainder being expensed over the 90 day reactivation period.
The offshore submersible drilling rig, THE 77, which has been cold stacked since 1999, will be reactivated and upgraded against a nine-month term contract with contract revenues of approximately $23 million. It is estimated that the unit will take 150 days to reactivate at a cost of approximately $16.8 million and approximately 70% of the reactivation cost will be expensed over the reactivation period.
Finally, the offshore submersible drilling rig, THE 78, will be reactivated and upgraded at a cost of approximately $11.4 million. The company received a six-month term contract with estimated contract revenues of $13 million to support the reactivation cost. Over the 120-day reactivation period, approximately $6.8 million of the cost to reactivate the unit will be expensed.
Jan Rask, President and Chief Executive Officer of TODCO, said "We are pleased to announce the signing of these term contracts to facilitate the reactivation of three cold stacked drilling rigs. We look forward to satisfying our customers' needs for deep gas drilling units with our upgraded submersible rigs, THE 77 and THE 78. With 16 remaining cold stacked rigs in the U.S., we will continue to adhere to our strategy of only reactivating rigs with customer support."
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