Kencana, Mermaid Strike Deal for Second Newbuild

In an announcement to Bursa Malaysia Bhd, AmInvestment Bank Berhad said that Kencana Petroleum Ventures Sdn Bhd (KPV) and Mermaid Drilling (Singapore) Pte Ltd on Tuesday signed a letter of agreement confirming the terms and conditions for the proposed design, construction, and completion of a second newbuild self-erected tender rig and derrick equipment set (KM-2).

KPV and Mermaid agreed to the following:

--Mermaid exercises the option to purchase KM-2 from Kencana HL Sdn Bhd (Kencana HL) pursuant to the purchase option in a contract that Mermaid Kencana Rig 1 Pte Ltd (MKR1) and Kencana HL signed on Oct. 22, 2007; and
--KM-2's first client is in Malaysia.

Provided that the above conditions are satisfied, KPV and Mermaid will incorporate a new company--MKR2--in Singapore to jointly own KM-2.

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