Oslo-listed Prospector Offshore Drilling S.A. (PROS) reports that it has entered into a turnkey contract for the construction of two additional high specification harsh environment F&G JU-2000E jack-up drilling rigs at the Shanghai Waigaoqiao Shipbuilding Co. Ltd (SWS) shipyard in Shanghai China. After these two new rig construction contracts, the company will have six new jack-ups under construction in China.
SWS is a part of the China State Shipbuilding Company and is an experienced shipbuilder and offshore yard having previously constructed ships, FPSOs and semisubmersible drilling rigs. SWS has recently finished the construction of a purpose built facility to be used for new jack-up construction.
Total delivered cost is estimated to be $209 million per rig, including shipyard price, project management, commissioning costs, drilling and handling tools, and spare parts. The payment terms are $2 million per rig of the shipyard price when contracts become effective and the balance at rig delivery. The shipyard price includes a $7 million provision for owner specified drilling and handling tools, and spare parts. There is a contract provision to allow Prospector (at its sole discretion) to delay delivery, and final payment, of each rig for up to six months under certain conditions. Prospector anticipates that the jack-up rig deliveries from the shipyard will occur in the first quarter of 2014 and the second quarter 2014.
Prospector has also secured three new rig construction options with SWS, bringing the total number of options the company has to six. The options are priced at the same turnkey shipyard price as the first two rigs, subject to standard escalations, with a down payment of 10% of the contract price and the remaining 90% on delivery, with a delivery of 31 months from the date of exercising the options. The Rig Options are valid until 30 June 2012, 30 September and 31 December 2012, respectively. There is no provision for owner elected delivery delay on the option rigs.
Norsupply AS, a company wholly owned by Skeie Technology AS, has acted as an advisor to SWS in the process leading up to this transaction. Skeie Technology AS is a shareholder in Prospector
Robert W. Rose, President and Chief Executive Officer of the Company says "SWS is one of the largest and most resourceful shipyards in the world, with a great history of project development and delivery. We are pleased at this opportunity to cooperate with SWS and acquire these rigs under such favorable payment terms. These contracts are separate from our existing new builds and allow that program of construction, financing and chartering to continue uninterrupted and on plan. These rigs will have identical drilling and operating systems to our first four rigs, including the most advanced and automated drilling equipment, enabling them to effectively perform the most difficult and challenging field developments worldwide (excluding Norway and the Artic) ".
August 2, 2011