The contract awards were approved by the Area 47 Management Committee, which includes representatives from Verenex, partner Medco International Ventures, and the Libyan National Oil Corp.
The first rig, contracted with Oil Drilling & Exploration (Borneo) Pty Limited, a subsidiary of Calgary-based Ensign Energy Services, is expected to be available to spud Verenex's first well late in the third quarter of 2006. The second rig, contracted with KCA Deutag, is expected to be delivered in the first quarter of 2007. The rigs are capable of drilling to the maximum expected target depth of 12,000 feet.
Both contracts include an initial two-year term, with two one-year extension options exercisable by Verenex. Under the contract terms, the company retains the ability to assign the rigs to third parties, with the approval of the contractor, if circumstances warrant. The maximum early termination exposure under the two contracts in aggregate is C$7.2 million (US$6.3 million).
Verenex said that the two rigs would give it the capacity to drill more than 30 wells over the next four years.
Given the current rig timing outlook, Verenex is reviewing its Libya work program and budget for 2006.
"The drilling services contracts signed this week are with established operators in Libya, both of whom have extensive in-country infrastructure and strong operational capability," stated Jim McFarland, president and CEO of Verenex. "The company is now well-positioned to move forward on a timely basis to test the potential of Area 47 with the drill bit."
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