Pride International, Inc. has been awarded contract extensions from Petroleo Brasileiro S.A. (Petrobras) for the deepwater, dynamically positioned semisubmersible rigs Pride Rio de Janeiro and Pride Portland.
The contract extensions, representing six years per rig, are expected to commence during late 2010 to early 2011, in direct continuation of each rig's current contract commitment and a scheduled shipyard program to complete a regulatory survey. Estimated contract revenues which could be generated from each six-year contract extension are approximately $768 million, inclusive of a performance bonus opportunity for each rig of up to 15 percent, or approximately $1.5 billion in total revenues. The contract extensions also provide for a cost escalation provision from the signing date through the six-year term.
Louis A. Raspino, President and Chief Executive Officer of Pride International Inc., commented, "The extensions of these two dynamically positioned, deepwater semisubmersibles through 2016 are further evidence of the continuing need by clients for deepwater rigs and reflect the long-term nature of the present deepwater drilling cycle. With these extensions, Pride will remain one of the largest contractors of floating rigs to Petrobras in support of their exploration and development drilling needs. Accordingly, our company is in an advantageous position to potentially benefit from additional deepwater rig requirements for Petrobras in Brazil, as well as in their international deepwater operations."
As previously disclosed, consideration received under the contract extensions will be subject to an earn-out provision with the company's previous joint venture partner. The company expects payments, if any, under the earn-out provision to be less then $10,000 per day, per rig over the term of the contract extensions, which would be capitalized as additional purchase price.
The Pride Rio de Janeiro and Pride Portland are two of eight deepwater rigs currently in the Pride International fleet, six of which are dynamically positioned deepwater rigs. The two semisubmersibles have operated offshore Brazil for Petrobras since entering service in 2004. Both units are expected to continue operations offshore Brazil throughout the extension period.
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