Transocean in $950 Million Rig Deal with Hydro

Transocean Inc.
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Hydro has awarded Transocean a drilling contract for the construction of an enhanced Enterprise-class drillship plus a multi-year contract award for the High-Specification semisubmersible rig Henry Goodrich. Combined revenues possible from the two contract awards total approximately $950 million over six years.

The enhanced Enterprise-class drillship is being designed to include the most advanced drilling capabilities in the offshore drilling industry. Hydro has awarded the company a four-year drilling contract, which is expected to commence by mid-2009, following shipyard construction, sea trials, mobilization to the U.S. Gulf of Mexico and customer acceptance. The contract commencement date is contingent on vendor performance and other factors. Revenues of approximately $694 million are possible over the four-year contract period, excluding revenues for mobilization, demobilization and client reimbursables.

Construction of the dynamically positioned, double-hull drillship is expected to take place at the Daewoo Shipbuilding and Marine Engineering Co., Ltd. (DSME) yard in Okpo, South Korea, with an estimated total capital expenditure of approximately $615 million, excluding capitalized interest. The rig will feature Transocean's patented dual-activity drilling technology, allowing for parallel drilling operations designed to save time and money in deepwater well construction, compared with conventional rigs. The dual-activity technology, along with a new and enhanced top drive system, an expanded high-pressure mud-pump system and other unique features of the drillship target the drilling of wells up to 40,000 feet of total depth. The rig will have a variable deckload of more than 20,000 metric tons and is designed to drill in water depths of up to 12,000 feet. The enhanced Enterprise-Class drillship will be the second unit to be constructed for Transocean in the DSME yard, following the previously awarded five-year contract from Chevron Corporation for the Discoverer Clear Leader. Both units are enhanced versions of the company's three predecessor Enterprise-class drillships, which have set drilling records in recent years, including the water-depth drilling record of 10,011 feet held by the Discoverer Deep Seas.

In addition, Hydro has awarded the semisubmersible rig Henry Goodrich a two-year contract for drilling operations in the U.S. Gulf of Mexico. The contract is expected to commence in February 2007, following the completion of a current contract commitment offshore eastern Canada. The rig's water depth capability will be improved to 5,000 feet with the purchase of additional equipment and when combined with a client-provided pre-laid mooring system. Revenues of approximately $256 million are possible over the two-year contract period, excluding revenues for mobilization, demobilization, contract preparation and client reimbursables.

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