Seadrill exercises drillship option at Samsung

seadrilldrillshipSeadrill has exercised an option to build a new ultra-deepwater dual derrick drillship at the Samsung shipyard in South Korea. Total project price is estimated  at $600 million (including project management, drilling and handling tools, spares, capitalized interest and operations preparations). The delivery is scheduled for the third quarter 2013.

The new unit is similar to the two drillships Seadrill ordered from Samsung in November 2010 with enhanced water depth capacity, technical capabilities as well as increased accommodation capacity compared to previous generation drillships. The dynamically positioned drillship, will be capable of operations in water depths up to 12,000 feet, and will have a hook load capability of 1,250 tons. This rig is also outfitted with a BOP (Blow Out Preventer) stack with a seven ram configuration, especially targeting operations in challenging areas such as the Gulf of Mexico, Brazil and West Africa. Additionally, the drillship will be equipped with a 165 ton capacity heave compensated crane enhancing the unit's operational flexibility and facilitating lifts on the seabed in water depths up to 3,000 meters.

Seadrill has simultaneously secured an extension of the maturity date for a further option agreement to build what would be its seventh drillship to be delivered from Samsung since 2008. Seadrill has currently no specific plan to exercise this option, but might consider it if the strong underlying trend currently seen in the deepwater market continues.

Alf C Thorkildsen, Chief Executive Officer of Seadrill Management AS, says: "The decision to add another ultra-deepwater newbuild to our modern fleet is based on the recent improvement in market outlook for ultra-deepwater units, with significantly more tender activities. The new drillship has an attractive delivery window, a favorable construction price and payment schedule and an equipment specification list that will meet our customers' future needs. We have had excellent experience with the Samsung yard and this design and are confident that the unit will be delivered on time and budget once again."

"The strengthening of Seadrill's equity basis through the recently announced bond conversion creates financial flexibility for growing the company further without raising additional equity," notes Mr. Thorkildsen. "The current long-term dayrates give a healthy return on the investment, with further upside if the market strengthens as a result of the strong trend in the oil price. The project will based on current dayrates and anticipated financing increase Seadrill's dividend capacity going forward. The ordering of the new drillship further confirms Seadrill's commitment to remain a growth company, with the target of reaching US$3 billion in EBITDA in the coming years."

April 11, 2011

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