May 6, 2008
ENSCO orders fifth ultra-deepwater semi at Keppel FELS
Dallas-headquartered ENSCO International Incorporated (NYSE: ESV) has placed a $512 million contract for a fifth ultra-deepwater semisubmersible drilling rig with Singapore's Keppel FELS Limited (Keppel FELS).
The news came after ENSCO announced that a subsidiary had finalized a drilling contract with Cobalt International Energy, L.P. for the fourth in the series, ENSCO 8503, set for delivery from Keppel FELS in late 2010 or early 2011. The drilling contract calls for operations in the Gulf of Mexico on a two-year primary term that can be extended to a three or four year term by Cobalt.
The aggregate day rate revenue for the base two-year contract term is expected to be approximately $372 million. The base operating rate is $510,000 per day, and the day rate will be subject to adjustment for variances in operating costs from January 2008 levels. ENSCO will be reimbursed for rig mobilization to the Gulf of Mexico and any special equipment upgrades requested by Cobalt.
ENSCO announced board approval for the fifth ultra-deepwater semi on April 24, when it reported record first quarter results that saw net income increase by 17% to $272.0 million ($1.90 per diluted share) on revenues of $580.3 million.
The fifth semi, ENSCO 8504, will be part of a six-rig deepwater fleet that includes the ENSCO 7500 deepwater semisubmersible that has been in service since 2000.
The ENSCO 8500 Series semis are enhanced versions of ENSCO 7500, and are based upon an ENSCO proprietary design. Enhancements include a two million pound quad derrick, offline pipe handling capability, increased drilling capacity, improved automatic station keeping ability and larger living quarters. The 8500 Series rigs will be capable of drilling in up to 8,500 feet of water. With these capabilities and features, the rigs will be especially well-suited for deepwater development drilling.
Daniel W. Rabun, ENSCO's Chairman, President and Chief Executive Officer, commented: "We are pleased to again partner with Keppel FELS as we execute on our strategy to play a significant role in meeting the unprecedented demand for deepwater drilling equipment. Our $2.0 billion investment in the ENSCO 8500 Series rigs demonstrates our commitment to expanding our deepwater rig fleet. We estimate that over one-quarter of our revenues will be derived from our deepwater fleet after all rigs commence operations."
Mr. Choo Chiau Beng, Chairman and CEO of Keppel O&M, said, "It is our privilege to participate in the growth of ENSCO's fleet of rigs. I am glad that ENSCO continues to entrust us also with construction, rig repair, modification and upgrading jobs. We remain fully committed to support them."