TODCO reports that its jackup rig, THE 256, incurred damage during a fire on board the rig in a Galveston, Texas shipyard. All personnel on the rig were safely evacuated and the fire has been extinguished. The rig, a 250 foot mat slot type unit, was being reactivated for a one-year term contract and was anticipated to start operating in July 2006. The Company has not yet determined the full extent of the fire damage, projected repair costs, necessary time to repair the rig or indemnities from the shipyard and their insurance underwriters. The rig could be substantially delayed from its anticipated July 2006 start date.
The rig has a net book value of approximately $2.6 million and is insured for $16.0 million as a cold-stacked rig. The deductible for rig damage is approximately $1.9 million in the event of a partial loss and zero in the event of a total loss. The Company is self-insured for 30% of all losses above the applicable deductible.
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