SeaDrill Confirms Contract for Third Deepwater Semisub
The Board of SeaDrill Ltd. has signed a final contract with Daewoo Shipbuilding in Korea (DSME) for the construction of an ultra-deep water harsh environment semi-submersible drilling rig of design GVA 7500-N. The semisubmersible, which will be fully capable of operating in all of the most extreme weather and water depth drilling areas, will be delivered to the owner in February 2008. The contract price for the unit is US$496.5 million and is based on a full turnkey delivery including an extensive testing program, 7,500 ft. of riser a 15k BOP and a full mooring system. The rig will have a soft payment schedule with 3 x 10% payment under the construction period and 70% by delivery.
Through a combination of the Company's cash flow, the cash position and the payment terms, SeaDrill sees no need to raise additional equity to finance the project.
The past experience and the credibility of the yard, the turnkey contract, and the contract price, the design, and the delivery time makes this deal into a very attractive deal in the current market. SeaDrill has, in addition to the fixed contract, received two optional contracts for the delivery of similar units in June 2008 and first half 2009. These options are declarable in two and eight months time and have a fixed contract price of US$486 million.
SeaDrill has, since it was established in May 2005, gathered an offshore fleet of twelve units including three ultra-deep water semi-submersibles. In addition, the Company has received fixed price options for one jack-up and three semi-submersibles declarable during the next year. The option package, with total value of US$1500 million, represents significant additional value for shareholders, both when it comes to a real value, optional value and value of early delivery.
The Board is currently working under the assumption that the Company will exercise these four optional units. It is, however, important to do this in such a way that the return on the existing equity is optimized. This can be achieved through reducing the need for additional equity by efficient debt financing, using cash flow from existing units and a good employment basis for the existing fleet.
SeaDrill will, based on an exercise of the three optional semi-submersibles have a fleet of six ultra-deep semi-submersibles plus be the owner of 25% of Ocean Rig which owns another two ultra-deep water units. Through such a position SeaDrill will have the second largest purpose built ultra-deep water fleet in the world and by far the most modern one.
Shareholders should remain assured that SeaDrill will work to be established as one of the world's leading drilling contractors and will continue the work for further consolidation of the industry.
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