US drilling services company Rowan Companies Inc. announced today that the company is canceling the construction of one jackup and suspending the construction of two others. In an unscheduled report to investors, Rowan announced a plan to reduce the company's expenditures through newbuild plan revisions.
The company previously announced the construction of four newbuild 240C class jackup rigs rated for 400 feet of water by Rowan's LTI facility in Vicksburg, Mississippi. The first of which, the Rowan-Mississippi, was completed in November 2008, and the second of these jackups, the Ralph Coffman, is on schedule for delivery by the end of 2009. Construction on the third 240C class jackup, the Joe Douglas, has been suspended, and Rowan will decide by mid-2009 whether or not to continue fabrication. The construction of the fourth 240C class jackup, scheduled to be completed in 2011, has been canceled altogether.
Additionally, the company planned to build four Super 116E class jackups (or Rowan EXLs) rated for 350 feet of water with Keppel AmFels Inc. in Brownsville, Texas. With the construction of the first three Rowan EXLs well under way and delivery expected in 2010, Rowan has decided to suspend the fabrication of the fourth rig, which was scheduled for completion in 2011. Rowan will decide in the next few months regarding the resumption of construction on this rig. Rowan is currently discussing payment terms for each rig with Keppel.
These newbuild construction revisions have allowed Rowan to keep its estimated 2009 capital expenditures between $550 to $575 million, which the company will fund through available cash and operating cash flows. The company does have access to a $155 million credit, but Rowan does not plan to tap into that resource.
According to the company's website, Rowan currently operates 22 jackup rigs worldwide.
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