SeaDrill to Build Second Semisub
The Board of SeaDrill Ltd. has in a board meeting August 12th agreed to execute the option the Company has with Jurong Shipyard to build a second sixth generation ultra deep water semisub based on Friede & Goldman design. The vessel is scheduled to be delivered in November 2008.
The contract price for the unit is US $390 million with further US $14 million to be paid in order to achieve 70% payment on delivery. The contract price is based on a turnkey contract with all owner furnished equipment (OFE) including 7500 feet of riser and BOP. In connection with declaration of the option SeaDrill has been awarded an option for a third unit at comparable terms. The option is declarable within August 2006.
The Board of SeaDrill is also in discussion with major yards with respect to building a harsh environment semisub with further options for delivery of the first unit in first quarter 2008. A clarification of this project is expected within the next month.
The decision to execute the second option at Jurong and pursue further semisub opportunities is taken after a thorough research of the future supply demand balance in the semi sub market. The aging fleet and the limited yard availability to build semisubs combined with strong rig demand driven by high oil price and increased development drilling is likely to create a good market situation for the rig owners in the next three to five years. The Board has in connection with project evaluation considered alternative investments including a further increase in the Ocean Rig position as well as investment in other assets as well as public companies controlling modern semisubs or semisub newbuilds. Particular emphasis has been put on cash flow generated before the Jurong newbuild is delivered. The conclusion from this research shows that the contracting of the Jurong unit is significantly more financially attractive than any alternative investments.
Chairman of SeaDrill, Mr. John Fredriksen, says in a comment: "We are pleased that we through immediate action and through a good relationship to the yard have secured some very attractive semisub newbuild slots for our Company. A combination of the contract price, delivery time and payment terms make this into a very competitive project. The project will, based on existing dayrates, give a large boost to SeaDrill's earnings and cash flow when the rigs will be delivered. The heavy back ended payment terms will minimize the negative financial carrying cost of the project until the rigs are in operation. SeaDrill's newbuild program, which now includes two semisubs and four Jackups, is a clear message to prospective charter that we are serious in our ambition to build a premium offshore fleet. With a total fleet of 12 units + two further options, and strategic ownership positions in Ocean Rig and Apexindo we are on track to make SeaDrill into one of the leading offshore contractors within the next five years. The existing units and the newbuild program give SeaDrill a unique position among the drilling contractors, as one of the only contractors who are positioned for significant organic growth in the coming years.''
The Board of SeaDrill has decided to apply for a listing at Oslo Stock Exchange. A preliminary meeting has been held with Oslo Stock Exchange. The target is to have the Company's shares listed in the end of September / beginning of October 2005.
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