Ocean Rig refers to press release December 29, 2005 regarding its capital repayment program.
As of June 28, 2006 the company has bought back 3,349,000 shares representing 1.8% of the outstanding number of shares. The company will increase its buy-back activity in order to buy up to 10% of the outstanding number of shares by year end 2006. Repurchases are expected to be made on a discretionary basis in the open market or otherwise at times and amounts as determined by management, subject to market conditions, applicable legal requirements, available cash and other factors.
The volume of additional capital repayment over and above the share repurchase program will be a function of among other factors the level of financing and the company's contract backlog. Based on recent market development the company believes it can secure additional contracts at attractive day rates. This increased backlog would leave room for more leverage through increased debt, allowing for return of capital to shareholders while maintaining an adequate risk profile. The company plans to hold an Extraordinary General Meeting later this year to decide on the volume of the capital repayment.
Ocean Rig will this summer commence work on drilling contracts with record level day rates and consequently achieve a significant increase in cash flow. Based on continued strength in the drilling market, the company intends to repay a significant portion of free cash flow in the future.
The Executive Chairman, Geir Aune, said, "The combination of the company's strong future cash flow and the current strong business environment for our services allow us to structure a broad capital repayment program including share buy backs and other methods of returning capital in a tax efficient manner for our shareholders."
Ocean Rig owns and operates two of the world's largest and most modern drilling rigs, built for ultra deep waters and extreme weather conditions. The units are currently operating offshore Angola and Norway.
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