AOD to increase water depth capability of newbuild jack-ups

Asia Offshore Drilling Limited (AOD), which has three KFELS Mod V  -  B Class jack-up rigs under construction at the Keppel FELS shipyard in Singapore, has decided to increase the water depth capacity of the three under-construction units from 350 feet to 400 feet. But it has decided not to exercise an option with the shipbuilder for a fourth rig.

AOD, in which Mermaid Maritime and Seadrill each have a 37.5 percent stake, says that the investment in enhancing the rigs’ depth capability will increase their marketability, allowing them to successfully operate in more offshore areas. The additional capital expenditure to extend the legs is estimated to be below US$ 5 million per rig.

These upgrades will have some impact on the delivery schedule of the first two rigs, as the first rig will be delivered in the first calendar quarter of 2013 and the second rig will be delivered by the end of the second calendar quarter of 2013. The delivery of the third rig remains unchanged at the end of the third calendar quarter of 2013. The Board believes these upgrades will improve the long-term return on investment for the company’s shareholders.

AOD says that given the prevailing uncertainty and volatility in the financial markets, the Board’s objective is to enhance the quality, marketability and value of the existing rigs rather than incur additional financial risk by ordering a fourth rig. The decision not to exercise the option will ensure that the company remains fully financed up to the delivery of the first rig in 2013.

September 29, 2011