April 18, 2001
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Santa Fe orders deepwater semis from Singapore yard
The first two rigs will cost approximately $285 million each. The option rigs are priced slightly higher.
Construction of the first rig will commence in May and take approximately 30 months to complete. The second rig is expected to commence 18 months into the construction of the first and is presently scheduled to be completed in 24 months.
Any subsequent rigs are expected to begin at 18 month intervals and be completed in 24 months.
The rig design, which optimizes drilling efficiency and construction cost, focuses on development drilling in water depths up to 7,500 feet in moderate environments.
The design emphasis is on high capacity and performance capabilities, says Santa Fe, and will provide both dynamic positioning and conventional mooring to the design water depth.
The rigs will be outfitted with four high pressure mud pumps and a high capacity mud treatment and storage system. Two separate hoisting facilities provide improved efficiency during the well construction process. The derrick will have capacity to accommodate all of the drilling tubulars including a dedicated landing string and a full string of either 13 3/8", 9 5/8" or 7" casing racked in triples.
The enhanced features and ability to reach a drilling depth of 30,000 feet below the seafloor in a highly efficient manner is expected to provide a substantial competitive advantage.
Santa Fe anticipates that the rig building program will be funded through existing cash balances and cash flow generated over the duration of the program; however, it may borrow some of the required funds if conditions warrant.
President and CEO Sted Garber commented, "With our new build semis, we are embarking on a program driven by our customers' long term operational requirements. Our semi design seeks the greatest operational efficiency at the lowest possible cost. Our rig will have capabilities matched by a relatively small number of rigs in the world's deepwater fleet. We believe it will be the customers' tool of choice and will enhance shareholder value through a good return and long term earnings growth."
The partnership will offer deepwater drilling services to both PanCanadian and other companies exploring off the East Coast of Canada.
The partnership will use Bingo 9000-2, the semi-submersible drilling rig known as Eirik Raude. The partnership will ultimately lease Eirik Raude from Ocean Rig. The arrangement is subject Ocean Rig getting consent from its secured creditors.
Eirik Raude is the second of two fifth-generation deep-water semi-submersible drilling rigs currently under construction at Friede Goldman Halter, Pascagoula, Miss. It is expected to be in-service during the first quarter of 2002. The first rig, Leif Eiriksson, is currently being prepared for sea trials.
Ocean Rig says gross revenues will amount to approximately $35 million to $60 million, depending on operational performance and actual contract length. In addition, Ocean Rig will receive $15 million for the cost of necessary upgrading and mobilization costs. The contract also provides for up to three optional wells with an estimated additional gross revenue of up to $30 million, assuming a five month option period.
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