Marathon Extends Deepwater Rig Contract to 4 Years for $750MM

Marathon Oil Corporation has exercised a two-year option extension on its contract for the Noble Jim Day drilling rig, expected to commence drilling operations in the deepwater Gulf of Mexico in the first quarter of 2010.

The original commitment was announced in March 2007 and the contract was signed in August 2007 with an initial two-year term. The option will extend the contract to 2014.
"We're encouraged by the acreage and quality of prospects that Marathon captured in the two recent Gulf of Mexico lease sales. This contract extension with Noble will provide ongoing rig availability to satisfy and fully execute our long-term deepwater Gulf exploration program, as well as additional appraisal and development activity that might be considered in the future," said David E. Roberts, Marathon executive vice president, Upstream. "Additionally, we believe it is a prudent step to lock-in competitive, long- term rates in a rapidly evolving deepwater rig market."
Marathon currently has two rigs under contract in the Gulf, with plans to drill about three significant exploration wells a year through 2010, along with a number of development wells associated with the Droshky discovery, which is expected to be sanctioned later this year. Marathon holds a 100 percent working interest in the Droshky discovery located on Green Canyon Block 244. Additionally, at the recent October 2007 and March 2008 lease sales, the Company was high bidder and expects to add interests in a total of 42 blocks, ranging in water depths up to 8,350 feet.
The Noble Jim Day will be a dynamically positioned semi-submersible rig capable of working in water depths up to 12,000 feet. The estimated contract commitment amounts to approximately $750 million over the full four-year period.
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