Pride International orders ultra-deepwater drillship

Pride International, Inc. (NYSE:PDE) says it has reached agreement with Samsung Heavy Industries, Ltd. (SHI) for the construction of a fifth ultra-deepwater drillship.

Like the four other ultra-deepwater drillships that Pride has ordered since 2007, the new unit will be constructed on a fixed price basis at the SHI shipyard in Geoje, South Korea.

Delivery is expected in mid-2013.

The expected construction cost of the rig, including commissioning and system integrated-testing and project management, is approximately $600 million. Pride International expects to fund the construction of the unit with available cash, cash flow from operations and, if required, borrowings under its available credit facility. It says payment terms negotiated with the shipyard are attractive, with a high percentage of the rig’s cost due upon delivery.

In addition, the agreement with SHI includes an option for a second unit at similar terms and conditions, which could be exercised during the first quarter of 2011.

Based on an SHI proprietary hull design measuring 750 feet long and 140 feet wide, the rig is designed for drilling in water depths of up to 12,000 feet, with a total vertical drilling depth of 40,000 feet, and will offer a pay load in excess of 20,000 metric tons and a 1,250 ton hoisting system.

The rig’s design and capabilities, which includes a dual derrick, allow for numerous well construction and field development activities that can be performed in parallel, producing increased rig efficiencies. Primary to these capabilities are offline tubular stand building features and a 160-ton automated heave compensating construction crane, allowing for the deployment of subsea production equipment without interference with ongoing drilling operations. The rig, which will be initially capable of drilling in water depths of up to 10,000 feet, will be equipped with dynamic positioning in compliance with DPS-3 certification, six-5.5 megawatt thrusters for enhanced station-keeping capacity, expanded drilling fluids capacity, a 15,000 psi subsea well control system and upgraded system handling, and living quarters for up to 200 personnel.

Louis A. Raspino, President and Chief Executive Officer of Pride International, Inc., commented, “The placement of an order for the company’s fifth ultra-deepwater drillship since 2007 is highly opportunistic, given the availability of attractive new construction pricing and payment terms. The expansion of our deepwater fleet allows us to more effectively address the increasingly complex well construction needs of our clients, with many featured systems on our new unit superior to those included on most other new build drillships, while building the critical mass that we believe is necessary to effectively compete and achieve success in the deepwater drilling sector.

“The long-term outlook for the deepwater drilling sector is expected to remain fundamentally strong, supported by a continuation of record geologic success, increased expansion by clients into new emerging locations, growing preference by many clients for the industry’s most advanced, efficient and safe drilling rigs, a continuing shift toward field development programs, new technologies that improve the recovery rates from deepwater reservoirs and an environment of sustainable crude oil prices that is supported by growth among numerous global economies. Given the long-term visibility afforded by these sector attributes, we are increasingly confident that additional deepwater capacity will be required by our clients as we advance through the next decade.”

December 14, 2010