KS Energy's Subsidiary Snags Drilling Contract for Discoverer-IV
Mainboard listed KS Energy Services Ltd. is pleased to announce that its wholly-owned subsidiary, Atlantic Oilfield Services Ltd., has secured a drilling contract with a reputable international oilfield operator for the supply and management of its newly acquired 2000 hp land rig, the Discoverer-IV.
The drilling contract, with a value of US$16.95 million, is for a firm period of one year plus two 6-months renewal options. When the renewal options are exercised, the contract value will be increased to US$ 30.40 million.
The Discoverer-IV, currently in the USA, is a new rig that has been acquired by KS Energy for US$28.0 million. This rig is being prepared in Dallas for mobilization to Tunisia. The acquisition will be funded by a combination of internal resources and external financing.
Having secured a firm Letter of Intent from Thani Tunisia El-Jem B.V. earlier on June 25, 2008 for its 1500 hp Discoverer II land rig, the Discoverer-IV is the second contract that the Group has secured in Tunisia within a short period of time. These developments will strengthen the Group's presence in Tunisia and are in line with its strategy to expand into the Maghreb area.
KS Energy has been actively expanding its fleet of land rigs. Within a period of one year, the Group has secured contracts for its three 1500 hp land rigs, which were not previously employed. This latest contract is for the new 2000 hp land rig that the Group is acquiring.
Together, all the four land rigs will generate revenue totaling US$102.9 million (approximately S$ 140 million).
Commenting on the charter of Discoverer IV, Kris Wiluan, Chairman and CEO of KS Energy, said, "Our priorities are to secure charter for the rigs in our fleet and to expand our fleet. At the same time, the Group is also continuing its efforts on divesting the balance of our non-core assets, which when completed will bring an additional US$40 million back to the Group."
In line with the Group's plans to expand its fleet and reduce its bank borrowings, it recently proposed a 2-for-5 rights issue. This rights issue is substantially underwritten by Pacific One Energy and concerted parties and Kim Eng Securities Pte Ltd. When completed, this rights issue is expected to raise up to approximately S$174 million for the Group.
"The strong demand from the oil and gas industry has created opportunities for KS Energy. We have to grow very quickly to capture these opportunities. On the other hand, businesses are facing the challenges of global credit curbs and uncertainties in the global financial markets. Therefore, it is important for us to balance our funding needs for our expansion plans and strike an optimal balance between debt and equity." Wiluan added when commenting on KS Energy's latest fund raising exercise.
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Company: Atlantic Oilfield Services more info
- KS Energy Commences $37MM Rig Supply Contract in the Middle East (Aug 19)
- KS Energy's Subsidiary Snags Drilling Contract for Discoverer-IV (Jul 22)
- Atlantic Aces $13MM LOI to Acquire Discoverer-II (Jun 25)