Ocean Rig and FGH Sign Agreement
Ocean Rig ASA and Friede Goldman Halter, Inc. announced that they have executed a Cooperation Agreement related to the completion and delivery of Ocean Rig's Bingo 9000-1 and Bingo 9000-2 offshore drilling rigs which are currently being outfitted at Friede Goldman's Pascagoula, Mississippi shipyard.
The agreement is the result of the joint effort of Ocean Rig and Friede Goldman to develop a mutually acceptable plan and schedule for completion and delivery of the two fifth-generation rigs, and marks an important step as the two rigs near completion. As of November 12, 2000, Bingo 9000-1 is 95% completed, and Bingo 9000-2 is 79% completed. The agreement establishes new delivery dates for the rigs, with a delivery date for Bingo 9000-1 set for March 1, 2001, and a delivery date for Bingo 9000-2 set for June 1, 2001. These delivery dates are within the range previously determined by ABB Offshore Systems AS, former Umoe Olje og Gass AS, the independent firm hired in January, 2000 by the two companies to monitor and evaluate, on an on-going basis, the completion of the two rigs.
As an indication of their commitment to meet these delivery dates, Friede Goldman has agreed that it will pay liquidated damages to Ocean Rig if the rigs are delivered later than these dates, at a rate of $75,000 per day per rig, to a maximum of $7.5 million per rig. The agreement also includes an early completion bonus of $1 million per rig, payable to Friede Goldman if the rigs are delivered to Ocean Rig prior to the new delivery dates. In exchange, under the agreement, each company has agreed, with certain specific exceptions, to withdraw all claims between the two companies as of the date of this agreement, including any actual or potential change claims within Friede Goldman's knowledge as of the date of this agreement, and Ocean Rig's entitlement to liquidated damages for previous delays.
The agreement contains several incentives to ensure timely completion and delivery of the two rigs. For example, Ocean Rig has agreed, as part of this agreement, to allocate additional funds to the project for targeted critical-path activities, such as the installation of certain electrical equipment. The agreement also includes a specific incentive plan targeted to the completion of Bingo 9000-2. According to this plan, Ocean Rig will pay an incentive bonus of up to a total of $5 million to Friede Goldman if Friede Goldman meets certain pre-determined progress targets at the end of each calendar month between now and April 15, 2001.
As a key element of the agreement, Friede Goldman on its part has agreed to waive any and all claims to detain either of the rigs at the yard once it has been determined that the rigs are ready to leave quayside for sea-trials. Under the terms of the agreement, the two companies will jointly determine when the rigs are ready to leave quayside—a crucial step in the preparation of the rigs for final delivery to Ocean Rig.
Friede Goldman and Ocean Rig are confident that this agreement will help ensure completion and delivery of the two rigs on terms acceptable and beneficial to both companies. They look forward to working together towards successful completion of these two highly-advanced rigs.