June 26, 2009
Rowan restarts construction of third 240C class jack-up
Rowan Companies, Inc. (NYSE: RDC) announced that it will recommence construction of the third 240C class jack-up rig, the Joe Douglas, at its Vicksburg, Mississippi shipyard, with delivery expected in the third quarter 2011.
Matt Ralls, Rowan's President and CEO, commented, "Earlier this year we halted construction on this rig due to concerns over the turmoil in the credit markets and the downturn in jack-up drilling markets. Based on improvements in the credit markets and our confidence in our liquidity outlook through 2010, we have elected to resume construction. We believe that this very capable, high specification rig will generate an attractive return on capital based on its expected go forward cost of $150 million and will be met with widespread customer acceptance when it is delivered in 2011."
Rowan began construction of the initial 240C class rig, the Rowan Mississippi, in 2007. The 240C was designed to be a significant upgrade of the original 116-C class, which was the "workhorse" of the global drilling industry since its introduction in the late 1970s. The Joe Douglas, like its sister rigs the Rowan Mississippi and the Ralph Coffman, will have 2.5 million pounds of hookload, an 80 feet cantilever reach and 491 feet of leg length.
Incorporating the expected impact of this revision Rowan newbuild plan, current estimates for the Company's 2009 capital expenditures will increase by approximately $20 to 25 million to approximately $550 million, and total 2010 capital expenditures will be in the range of approximately $300 to 325 million. Rowan anticipates funding these capital expenditures through available cash and operating cash flows. While not expected to be utilized, the Company also has $155 million of credit available under its undrawn credit facility, and will consider other financing alternatives that may become available.
Construction is continuing on the second 240C, the Ralph Coffman, which is scheduled to be delivered early 2010. The company's first three EXL rigs remain on schedule and budget, with deliveries scheduled for the second, third and fourth quarters of next year. The fourth EXL rig remains on hold pending the company's decision to resume construction by third quarter 2009.