Sembcorp Marine in rig venture with Skeie
Singapore's SembCorp Marine Ltd (SembCorp Marine) has entered a somewhat complex agreement with Norway's Skeie Group that will see construction of a $110 million jack-up rig at Sembcorp Marine's PPL Shipyard unit.
As previously reported, Skeie has also reached an agreement for construction of a jack-up at Singapore's Keppel FELS
Through its wholly-owned subsidiary, Sembawang Shipyard (S) Pte Ltd, SembCorp Marine has established a single purpose joint venture company, Kristiansand Drilling Pte Ltd (Kristiansand) with Deep Drilling 1 Pte Ltd (Deep Drilling 1), a wholly owned subsidiary of Skeie Group AS (Skeie Group). SembCorp Marine holds 82 percent of the equity stake in Kristiansand with the Skeie Group holding the remaining 18 percent.
Kristiansand has entered into an EPC Construction Contract with PPL Shipyard Pte Ltd (PPLS) to construct a Baker Marine Pacific Class 375 Deep Drilling Offshore Jack-up (Jack-up) for a total price of US$110 million (S$186 million). The jack-up will be built in PPL Shipyard. During the period of construction, the jack-up will be owned by Kristiansand.
Deep Drilling 1 has at an option, exercisable at its sole discretion, from PPLS for an additional jack-up rig to be constructed.
Deep Drilling 1 and SembCorp Marine (through its subsidiary) will pay US$20 million (S$34 million) and US$90 million (S$152 million) respectively for their equity capital in Kristiansand.
This investment does not have a material impact on SembCorp Marine's earnings per share and the net tangible assets per share for the current financial year. It is to be funded internally together with existing banking facilities.
PPL Shipyard is a rig-building yard with proven track record in the building and servicing of jack-ups and semi-submersibles. To-date, PPL Shipyard has built 25 jack-ups and three semi-submersibles. It has also recently delivered the first of two deepwater jack-up drilling rigs to GlobalSanteFe International with a second jack-up drilling rig due for delivery in the first quarter of 2004.
The Baker Marine Pacific Class 375 Deep Drilling Offshore Jack-up Rig beeing built for Kristiansand is a proprietary design developed by Baker Marine in conjunction with PPL Shipyard. Incorporated in the design of the rig is the Baker Marine time tested proprietary jacking system that can withstand storms without the use of a Rack Chock System. The rig is also equipped to drill high pressure and high temperature wells of more than 30,000 feet.
Construction of the jack-up is expected to commence in the second quarter of 2004 with a construction period of 24 months. Delivery of the Jack-up is scheduled in the first quarter of 2006. When completed, the ultra deep drilling jack-up rig will be capable of operation in water depth of 375 feet and drilling depths of 30,000 feet.
Mr T. K. Ong, Managing Director of PPL Shipyard said "Back in the 1980s, some 57 Baker designed jack-up rigs, by far the largest number of any design, were commissioned. With this contract, the confidence in the design and the capabilities of this Pacific Class 375 Jackup rig could lead to the emergence of more Baker designed rigs being built."