SBM Offshore to Lease FPSO Espadarte to Petrobras for $1.7B

SBM Offshore announced that a letter of intent has been received from Petrobras for a lease and operate contract of the Company's existing FPSO Espadarte for a period of 18 years on the Baleia Azul field offshore Brazil.

The FPSO Espadarte will be disconnected from its current location at the Espadarte field offshore Brazil and after transfer to a shipyard, the FPSO will be modified and upgraded for the new project and will then transfer back to Brazil for offshore hook up, installation and operation on the Baleia Azul field.

The planned disconnection of the FPSO from the Espadarte field is in April 2011 and first oil at the Baleia Azul field is planned in July 2012. The FPSO will require a significant additional capex investment for the Baleia Azul field.

The non-discounted total of the fixed lease rates payable for this contract amounts to approximately US $1.7 billion.