MAY 21, 2014 — Hercules Offshore has signed of a five-year contract with Maersk Oil in the U.K. sector of the North Sea on a newbuild harsh environment jack-up. Cowan & Company notes that the contract, worth $420 million in revenue (with a $9 million mobilization fee included) represents roughly a $225,000 day rate on the rig. The to-be-named newbuild will be a Friede & Goldman JU-2000E design and will be a 400 ft capable rig with a two million pound static hook load and a 15,000 psi BOP on board. The newbuild, which has an estimated total cost of $270 million, is scheduled to be delivered in April of 2016.
The rig will be built at Sembcorp Marine's Jurong Shipyard in Singapore, with payment terms of 10% of the build cost this quarter, 10% one year from initial payment and 80% upon delivery.
"We view the announcement as a significant positive for the stock and expect share to trade up in the near-term," says Cowan. "The rig order demonstrates the company's willingness to seek alternative sources of earnings as its older-vintage GOM fleet is gradually retired."
Sembcorp Marine says the contract is worth $236 million to Jurong. It says the JU 2000E design has enhanced features suitable for U.K. operations.
Mr. William Gu, Jurong Shipyard’s General Manager of Offshore Division, said: "We are honored to work with Hercules Offshore and we would like to congratulate Hercules Offshore in clinching the contract from Maersk Oil and Gas. This reaffirms Jurong Shipyard’s position as a customer-oriented yard in providing tailor-made rig designs and solutions for our customers."
Mr. John T. Rynd, Chief Executive Officer and President of Hercules Offshore, said: "We are pleased to partner with Jurong Shipyard as we believe in Jurong Shipyard’s strong track record in delivering quality rigs customized for our clients. We look forward to our new friendship with Jurong Shipyard and a robust future partnership."