Abbot confirms that its operating subsidiary KCA DEUTAG has received a binding LOI from a major operator in West Africa for a three-year contract with options for its Neptune jackup. Valued at US$225 million, this contract is due to commence in the second quarter of 2007 at a day rate of US$190,000. The rig will be mobilized to West Africa from the Gulf of Mexico for a fee of US$15million to be paid by the operator.
KCA DEUTAG has contracted the heavy lift vessel 'Black Marlin' to effect the mobilization with an estimated departure from the Gulf of Mexico towards the end of February 2007, which will coincide with the completion of the rig's upgrade program.
In Algeria, BP in association with Sonatrach, has awarded KCA a one-year contract with options for its two 1500hp Nomad Class rigs, built by Abbot's subsidiary Bentec. This contract is due to commence in the fourth quarter of 2007 and is worth US$32million for the two rigs.
In Libya, KCA DEUTAG has also been awarded a three-year contract with options, for its 3000hp T-202 land rig, which will be mobilised from Bangladesh. Scheduled to commence in December 2007, the latest contract is valued at US$45million. Also in Libya, Veba Oil has awarded KCA DEUTAG a well-to-well contract for its 700hp workover rig T107, which is estimated to continue over a period of one year.
KCA DEUTAG has also been awarded two contracts in Nigeria, together worth about US$50million, from SPDC (Shell Petroleum Development Company of Nigeria Limited, operator of the NNPC, Shell, Agip and Elf joint venture). SPDC has awarded a two-year contract with options for the 1000hp T103 rig, with commencement scheduled for May 2007, and a two-year contract with options for KCA DEUTAG's newly built 2000hp T209 rig, which is due to start operating in June 2007.
As a result of these awards, the Group has, at today's date, fixed forward contracts valued at in excess of US$ 2.3billion with optional contract extensions to 2012 with a value of over US$ 1.6billion.
The Group continues to benefit from the growing international demand for its land rigs with day rate contracts achieving increases of up to 40% in rates for new contracts. Overall, the day rate increase over the entire land rig fleet has been 16% in 2006, and continued growth in 2007 and beyond is anticipated.
With its portfolio of fixed contracts and extension options the Group has secured almost 90% of its budgeted turnover for 2007 and 70% for 2008.
Abbot also confirms that, as indicated at the time of the Group's interim results, the original contract for the jackup Tellus has been terminated. The Group is now at an advanced stage of negotiations for this rig to enter into a long term contract with a major operator at attractive market rates and a further announcement will be made in due course.
Our jackup, Jupiter, continues to perform satisfactorily under its contract with Pemex.
Alasdair Locke, Executive Chairman of Abbot commented:
"As I said at the time of our interims 2006 has been an exceptionally strong year, and we have confidence in the continuing robustness of the market place for the future. Our decision to invest substantially in strategic international areas of operation has been fully justified by our ability to secure fixed contracts in excess of US$ 2.3billion at today's date.
"This, coupled with the level of optional contract extensions, the continued world-wide demand for rigs and the continued strength of the price of oil, gives the Group visibility of earnings growth for 2007 and beyond.
"We remain confident that the outcome for 2006 will meet market expectations."
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