Under the terms of the agreement, ENSCO will be reimbursed for mobilization to the Gulf of Mexico and any special rig upgrades requested by Nexen. Day rates will be adjusted for variances in operating costs from a February 2007 base date. The expected contract term commencement is in the second quarter of 2010.
ENSCO 8502 is the Company's third of four ultra-deepwater semisubmersible rigs in the ENSCO 8500 Series(R) under construction, and will join the ENSCO 7500 deepwater semisubmersible rig that was delivered in 2000. All four of the 8500 Series rigs are under construction by the Keppel FELS Limited Shipyard in Singapore. They remain on schedule and within budget with expected deliveries in the second quarter of 2008 for ENSCO 8500, the first quarter of 2009 for ENSCO 8501, late in the fourth quarter of 2009 for ENSCO 8502, and in the third quarter of 2010 for ENSCO 8503. ENSCO 8500 and ENSCO 8501 are committed under long-term drilling contracts.
Daniel Rabun, ENSCO's Chairman, President and Chief Executive Officer, commented: "We are very pleased to be working with Nexen on another ultra-deepwater semisubmersible drilling contract. Nexen's confidence in the ENSCO 8500 Series(R) design is evidenced by this second commitment, having already committed to participate in a three and a half year shared commitment for ENSCO 8501.
"Our $1.5 billion investment in the ENSCO 8500 Series(R) demonstrates a solid commitment to increasing our deepwater rig fleet. With approximately 40% of our current $3.6 billion contract backlog attributable to our deepwater fleet, we expect these assets will meaningfully add to our revenue stream for many years. We continue to market ENSCO 8503, our only remaining uncommitted deepwater rig. With the continued strong demand for deepwater equipment, we are confident the rig will be committed well in advance of its delivery in 2010."
The ENSCO 8500 Series(R) ultra-deepwater semisubmersibles are enhanced versions of ENSCO 7500, and are based upon an ENSCO proprietary design. The 8500 Series rigs will be capable of drilling in up to 8,500 feet of water, and can be upgraded to 10,000 feet water-depth capability if required. Enhancements include a two million pound quad derrick, offline pipe handling capability, increased drilling capacity, greater variable deck load, and improved automatic station keeping ability. With these features, the 8500 Series rigs will be especially well-suited for deepwater development drilling.
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