Coastal Energy Company announced that its wholly owned subsidiary, NuCoastal (Thailand) Limited, has signed a Letter of Intent ("LOI") with Deep Drilling 7 Pte. Ltd. for a three-month charter of the newbuild jackup rig Deep Driller 7.
The rig, a Baker Marine Pacific Class 375, is currently undergoing acceptance testing at the PPL Shipyard in Singapore and is expected to commence operations in the Company's Songkhla field in the Gulf of Thailand by late September 2008. The LOI allows for an extension of up to an additional three months.
Drilling capital expenditures are expected to be approximately $9 million higher over the three month period utilizing the Deep Driller 7 rather than the originally contracted jackup. Management believes that the incremental costs will be largely offset by increased efficiency gains.
Randy Bartley, Chief Executive Officer of Coastal Energy, commented, "We are excited to finalize this agreement. The Deep Driller 7 will help the Company achieve its goal of first production at Songkhla by year end."
The Company has retained the option to utilize the previously contracted rig, if appropriate, pursuant to the amended drilling contract.
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