Prospector Offshore Drilling Exercises Options for Two Jack-Ups in China

Prospector Offshore Drilling Exercises Options for Two Jack-Ups in China

Prospector Offshore Drilling S.A. announced today that it has entered into, and made effective, two independent shipyard contracts (“Shipyard Contracts”) with Shanghai Waigaoqiao Shipbuilding Co. Ltd (“SWS”) Shipyard in Shanghai, China for the construction of two additional high specification harsh environment JU-2000E jack-up drilling rigs. Both rigs will be designed, and fully outfitted, for operations in the United Kingdom, Netherlands, and Denmark sectors of the North Sea. The Company now has six such JU-2000E jack-ups under construction.

The Shipyard Contracts terms are consistent with the terms in the contracts for the Company’s two rigs already under construction at SWS (“Original SWS Contracts”) executed in August 2011. The terms of the Shipyard Contracts include a USD 7 million provision for owner specified drilling and handling tools, and spare parts (“Shipyard Credit”). The payment terms include an initial payment of USD 14.5 million per rig, with the balance due at rig delivery. The Company will use its existing cash available to fund the initial payments. The total delivered costs are estimated to be USD 220 million per rig, which includes the Shipyard Contract price, the Company’s project management costs, commissioning costs, drilling and handling tools, and other Company furnished spare parts. The Company anticipates that the rigs will be delivered in the third quarter of 2015 and the first quarter of 2016.

The Company will have one remaining option for the construction of a JU-2000E c with SWS with a price in the Original Shipyard Contract, subject to standard escalations. This option is valid until 30 June 2013. Other construction options remain unchanged.

Norsupply AS, a company wholly owned by Skeie Technology AS, has acted as an advisor to SWS in the process leading up to this transaction. Skeie Technology AS is a shareholder of the Company.

Robert W. Rose, President and Chief Executive Officer of the Company says “The demand for high specification jack-ups continues to increase with visibility of employment opportunities extending into 2015 and 2016. We are pleased with the professional approach of SWS and the quality of rig they are building with our first two orders and look forward to these two rigs joining our fleet”.

Prospector Offshore Drilling, March 18, 2013; Image: SWS