The MSC CJ-46-X 100D design jackup is a proprietary design by Marine Structure Consultants ("MSC"). The jack-up rig will be equipped with a drilling package that will enable it to drill at 30,000 feet drilling depth while operating at 350 feet of water. Each rig has accommodation facilities for 100 men.
The construction of the two jackups is expected to commence in the second quarter of 2006. The first unit is scheduled to be delivered in the fourth quarter of 2008. The second unit is scheduled to be delivered in the second quarter of 2009.
These are the first rig building contracts announced by the Group and signifies a major breakthrough for the Group into the lucrative rig and offshore construction market. With the new contracts, Labroy's orderbook for its Batam yards has swelled to approximately S$1.0 billion.
Mr. Tan Boy Tee, Chairman and Managing Director of Labroy commented, "We are extremely pleased to secure these new contracts from a Norwegian customer. These are the first rig construction contracts secured by Labroy Marine and it represents a major milestone in the history of the Group. Going forward, we remain optimistic to secure more rig construction contracts in the future."
Mr. Tan continued, "We have developed a new 40ha yard in Batam for rig construction. The yard, which is adjacent to our existing yard, has the space capacity to accommodate the construction of a minimum of six jackups. We shall continue to explore more opportunities in the rig building and offshore construction sector."
The offshore Oil & Gas sector continues to look buoyant with crude oil prices hovering around the US$60 level. According to analysts' estimates, rig utilization is almost at 100% worldwide. Operators could experience a shortage of 160 unfulfilled jackup requirements for the next 12 months while there are only 44 jackups on order.
Barring any unforeseen circumstances, Labroy expects a positive contribution to its earnings from the contracts. However, the contracts are not expected to have a material impact on the net tangible assets and earnings per share of Labroy Marine for the year ending December 31, 2006.
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