This contract will significantly enhance Abbot's existing operations in Gabon, where KCA Deutag currently has two land rigs on contract to Addax Petroleum. It will also further strengthen the Group's relationship with CNR, an important client for KCA Deutag, with whom it has five platform rigs under contract in the UK North Sea.
Abbot further announces that it has entered into a binding letter of intent, in respect of the Ben Avon, with a leading independent operator. The contract has a value in excess of US$55 million and is expected to commence in May 2007, running until the commencement of the CNR contract mentioned above.
These contracts confirm the fixing of all three of Abbot's jackup rigs on long term contracts, at rates considerably in excess of those in the Group's assumptions at the time of acquisition in June 2006, providing a high degree of forward visibility of earnings. The Ben Loyal (formerly Songa Jupiter) is fixed to Pemex for two years from September 2006 and the Ben Rinnes (formerly Songa Neptune) has recently signed a contract with CABGOC for three years, commencing in the second quarter of this year. The combined value of these four contract awards is approximately US$560 million.
Commenting on the contract, Alasdair Locke, executive chairman of Abbot said: "These contracts further strengthen our position in the international MODU market, which we entered last May with the acquisition of Songa Drilling. We continue to see a positive trend on day rates and demand for our services across the range of all our business activities, providing further transparency of forward revenues for the Group. In addition, jackup rig utilization in the international market remains extremely strong and we continue to see attractive opportunities in all our areas of operation and certainly in excess of the market's capacity to undertake them. We are confident of delivering improving results for the foreseeable future."
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