Pride International, Inc. is continuing the expansion of its premium deepwater fleet, following a multi-year contract award from a subsidiary of Petrobras for the construction and operation of an advanced-capability, ultra-deepwater drillship in support of Petrobras' international exploration and development drilling projects. The ultra-deepwater drillship, to be constructed at the Samsung Heavy Industries, Co. Ltd. (SHI) shipyard in Geoje, South Korea on a fixed-price basis, is expected to be delivered from the shipyard in the first quarter of 2011, following construction, commissioning and system-integrated testing.
The new drillship, to be named at a later date, is Pride's third ultra-deepwater drillship construction project, following previously announced decisions in 2007 to construct one unit and to purchase from another party a second unit in the early stages of construction. Like the first two drillships, the latest unit is based on an SHI proprietary hull design measuring 750 feet long, 140 feet wide and offering a pay load in excess of 20,000 metric tons. The drillship is designed for drilling in water depths of up to 12,000 feet, with a total vertical drilling depth of up to 40,000 feet, and will have off-line tubular stand building capabilities. The rig will feature dynamic positioning in compliance with DPS-3 certification.
The rig, which will be initially equipped for drilling in water depths of up to 10,000 feet, will also have expanded drilling fluids capacity, a 1,000 ton capacity top drive and living quarters for up to 200 personnel. The expected construction cost of the rig, including commissioning and system integrated testing and excluding capitalized interest, is approximately $720 million. The company expects to fund the construction of the unit with available cash and borrowings.
The multi-year drilling contract allows Petrobras to elect, by Jan. 31, 2010, a firm contract term of at least five years and up to seven years in duration. The drilling contract provides for the payment of a fixed daily rate and the payment of a performance bonus of up to 17% of the fixed daily rate if a five year term is selected (or up to 15% if a six or seven year term is selected.) Depending on the firm contract term chosen and excluding revenues for reimbursement of costs associated with the mobilization of the rig to an initial location, estimated contract revenues which could be generated range from $916 million to $1.24 billion and include the operating dayrate, the full amount of the performance bonus and other contractually guaranteed payments of $41 million to $49 million. In addition, a cost escalation provision is provided from the signing date of the contract through the term selected.
Louis A. Raspino, President and Chief Executive Officer of Pride International, Inc., stated, "This third addition to our deepwater fleet in less than seven months, along with the supporting contract, is beneficial in a number of ways as we continue to successfully transition the company to a pure offshore focus with an increasing emphasis on ultra-deepwater drilling.
The addition will add to Pride's critical mass in dynamically-positioned deepwater floaters, currently the industry's second largest fleet, and enhancing the company's ability to attract and retain the industry's best operations and engineering talent. Pride will also achieve construction management efficiencies through the construction of this rig, as all three of the company's newbuilds will be constructed in the same shipyard with an identical hull design and similar technical features.
"Deepwater exploration and development activity continues to be supported by impressive geologic success and strong energy demand outlook well into the next decade. Technological advancements continue to enable the industry to achieve drilling successes in challenging deepwater environments, resulting in promising new geologic plays, the emergence of new deepwater regions and expansion of the customer base. Each of these factors buttresses our high level of confidence in the long-term duration of the present deepwater cycle and in our ability to realize attractive contracting opportunities for our two ultra-deepwater drillships already under construction, while building our resolve to pursue additional deepwater growth opportunities," Raspino said.
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