Freddie snaps up SeaDragon semis

John Fredriksen’s Seadrill has entered into an agreement to acquire the two ultra-deepwater semi-submersible drilling rigs, Seadragon I and Seadragon II. The total project price for the two rigs, which are currently under construction at the Jurong Shipyard in Singapore, is estimated to be approximately US$1.2 billion (including project management for the remaining construction period, drilling and handling tools, spares, operations preparations and capitalized interest). Deliveries of the two rigs are expected in the first quarter and fourth quarter 2011, respectively.

The SeaDragon saga began in 2006 with a plan to build the hulls of two Moss Maritime CS50 Mk II design semis in Russian shipyards and then oufit them on Teeside, U.K. When the hulls were delivered, though, that plan fell through and the hulls went to Jurong.

Seadrill has secured new bank debt to finance the investment. The principal terms and conditions have been agreed and the debt will have a seven-year tenor and a 13-year repayment profile. The two rigs will serve as security for the new debt.

Furthermore, the first rig to be completed, Seadragon I, has a five year contract in place. However, due to postponed delivery the contract is subject to further discussions among the involved parties. The second unit, Seadragon II, has currently no employment in place.

Alf C Thorkildsen, Chief Executive Officer of Seadrill Management AS says, “We expect the demand for ultra-deepwater units to strengthen over the next years. This investment increases our exposure to this growing market segment at an acceptable price and a manageable risk. Furthermore, we are well familiar with the design of and equipment on the rigs and are pleased to be able to continue our long and strong relationship with the reputable Jurong Shipyard.”

John Fredriksen, Chairman of Seadrill Limited says, “The cash break-even cost per day for each rig including operating cost, tax, interest expenses and scheduled debt installments is expected to be around US$385,000. The Board anticipates that the purchase of the two rigs including the agreed financing will strengthen Seadrill’s dividend capacity going forward.”

Seadrill says that the rigs are based on the Moss Maritime CS50 Mk II design and belong to a high specification, new generation of drilling units, focusing on a broader spectrum of operational capabilities, a larger operating area, a high load carrying capacity, efficiency and improved safety and working environment as well as a special environmental focus. The dynamically positioned (DP 3 class certification) rigs are equipped with NOV drilling equipment and have water depth capability up to 10,000 ft and total vertical drilling depth capacity up to 35,000 feet. The rigs each have a single derrick with dual pipe handling and offline stand building capabilities providing for increased efficiency. The subsea well control system includes a six ram 15k psi BOP stack with two 10k psi annulars. Each rig’s variable deck-load specification is 6,200 t and has the accommodation capacity for 192 people.