Sembcorp's Jurong Secures Agreement to Build Rig at $640MM

Sembcorp Marine's Jurong Shipyard and Larsen Oil & Gas have announced an agreement to construct a new deepwater semisubmersible drilling rig. The new rig will be constructed under a turnkey contract, with Larsen Oil & Gas as rig construction manager.

This latest turnkey rig order is the fourth consecutive newbuild deepwater semi-submersible drilling rig that the owner has placed with Jurong Shipyard and will have a construction cost of $640 million, excluding project management and financing costs.

Scheduled for delivery in April 2011, the 6th generation ultra-deepwater semisubmersible drilling rig will be built based on the Friede & Goldman Ex-D design. It will have specifications identical to the three deepwater semisubmersible drilling rigs ordered by owner from Jurong Shipyard. 

Petrolia Drilling ASA through a 100% subsidiary has agreed to subscribe for 30 percent of the shares in a new single purpose rig company registered on Cayman Island. Petrolia Drilling estimated commitment equals approximately MUSD 50, which will be funded from available cash reserve.
The remaining 70% of the equity is already committed by a limited group of institutional investors arranged by Arctic Security. Bank financing and other dept financing will fund the remaining capital need of the rig.
“We have chosen Jurong Shipyard as a trusted partner in our strategic thrust into deepwater rig building. Our confidence in Jurong Shipyard is a result of our strong working relationship and the yard’s proven rig building track record. We are pleased with the yard’s high standards of quality, safety and reliability in its on-time deliveries. The co-operation with Jurong Shipyard stretches far beyond traditional client-contractor relations and this cooperation is a large part of our success over the past five years," said Larsen (Singapore) Managing Director Martin Nordaas.
"All three units of our deepwater semi-submersible rigs, PetroRig I, PetroRig II and PetroRig III, currently under construction in the shipyard have secured long-term charter contracts. PetroRig I will be chartered to Petrobras America to drill in the Gulf of Mexico while PetroRig II is contracted to Petroleo Brasilieiro S.A. for drilling in offshore Brazil in 2009. PetroRig III will be chartered to Pemex for drilling in Mexico in 2010," he continued.
"We remain optimistic of the offshore oil and gas market and will continue with our robust expansion into this sector,” Nordaas said.
"We have demonstrated our strong turnkey expertise in semi-submersible construction by being the first to deliver on-time a total turnkey semisubmersible rig, the West Sirius to its owner in March 2008,” added Senior General Manager of Offshore Division Donn Lee.

This contract, effective by end July 2008, is not expected to have any material impact on the net tangible assets and earnings per share of Sembcorp Marine for the year ending December 31, 2008.