This is the third land rig that the JV will charter to the client. Two land drilling rigs under an earlier charter agreement are scheduled for delivery to the client this month.
With its electrical rotary table and higher mast, the Land Rig can conduct directional drilling and lift 3 pieces of drill pipes at one time, resulting in higher efficiency as compared to mechanical rigs, which can only do vertical drilling and lift 2 pieces of drill pipes at a time. "We are pleased to have secured another contract from our existing client. The confidence our clients have in us to deliver innovative solutions in a timely basis further endorses our capability in procurement, charter and management of capital equipment," commented Mr. Kris Wiluan, Executive Chairman of KS Energy.
The Land Rig is currently under construction in China and is expected to be delivered in 1Q FY2007. KS Energy will play a key role in the construction, installation, commissioning, supervision and the subsequent management of the Land Rig. The total project cost will be funded by shareholders’ equity and bank borrowings. Under the joint venture agreement, 70% of the profits will accrue to KS Energy. At the end of the charter, the JV as owner of the Land Rig will be able to redeploy the asset for other operations.
The project is not expected to have a material impact on the Group’s earnings per share or net tangible assets for the financial year ending 31 December 2006. None of the directors or substantial shareholders of KS Energy has any interest, directly or indirectly, in the above transaction.
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