Noble Corporation has secured a Memorandum of Understanding for contracts with a total revenue potential of approximately $4.0 billion over 29 rig years on its five deepwater rigs currently operating offshore Brazil for Petroleo Brasileiro S.A. -- Petrobras. Upon execution, these new contracts could increase Noble's total backlog to more than $10 billion. Potential revenue includes a one-year option on the Noble Paul Wolff and paid shipyard time during upgrades on three drillships and assumes earning the full amount of all performance bonuses. The contracts are subject to the approval of Petrobras' Top Management.
The five rigs' contract terms and potential revenues are:
Noble Paul Wolff, a fourth generation 9,200-feet water depth, dynamically positioned semisubmersible, with a five-year primary term beginning in November 2009. Including the one-year option and an 18% performance bonus, the total revenue potential is $1.08 billion;
Noble Roger Eason, a 7,200-feet water depth, dynamically positioned drillship, with a six-year term beginning March 2010 with revenue potential of $888 million including a 15% performance bonus;
Noble Leo Segerius, a 5,600-feet water depth, dynamically positioned drillship, with a six-year term beginning in the second or third quarter of 2009 with revenue potential of $769 million including a 15% performance bonus;
Noble Muravlenko, a 4,900-feet water depth, dynamically positioned drillship, with a six-year term beginning March 2009 with revenue potential of $744 million including a 15% performance bonus; and
Noble Therald Martin, a 3,900-feet water depth, conventionally moored semisubmersible, with a five-year term beginning October 2010 with revenue potential of $542 million including a 10% performance bonus.
David W. Williams, Chairman, Chief Executive Officer and President, said, "We are delighted to have the opportunity to continue to provide deep water drilling capability to Petrobras for years to come. With the award of these contracts, we will not only boost our overall fleet backlog to more than $10 billion, we will also be able to move forward with our planned upgrades on each of our three drillships. These upgrades, which are designed to enhance the reliability and operational performance of the rigs, are estimated to cost approximately $175 million per ship and will take each rig out of service for about 150 days. We are also pleased that Petrobras saw the value in our upgrade plans and decided to support the program by paying $90,000 per day for up to 150 days for each rig's scheduled shipyard stay."
"We expect to perform the upgrade work on the rigs sequentially and will begin ordering the required long lead equipment once the contracts are formalized. We believe these projects provide an impressive rate of return for the shareholders while enhancing our ability to satisfy our customer's present and future drilling requirements," Williams added.
In addition to the five rigs mentioned above, Noble's newbuild deepwater semisubmersible, the Noble Dave Beard, is scheduled to commence its five-year contract with Petrobras offshore Brazil in 2009.
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