Seadrill Orders Two New Jack-Up Rigs in China

Seadrill, an international offshore drilling contractor, has exercised fixed price options for the construction of two high specification jack-up drilling rigs at Dalian Shipbuilding Industry Offshore Co., Ltd. (DSIC Offshore) in China.

The rigs are scheduled for delivery during the third and fourth quarter of 2015, and the estimated total project price is approximately US$230 million (including project management, capitalized interest, drilling and handling tools, spares and operation preparations) per rig, with tail-heavy payment terms.

The two new units will be based on the F&G JU2000E design, with water depth capacity of 400ft and drilling depth of 30,000ft. Seadrill has now in total six jack-ups under construction at DSIC Offshore of which two are scheduled for delivery in 2013 and four in 2015.

Fredrik Halvorsen, Chief Executive Officer of Seadrill Management Ltd, says in a comment, “The two jack-up newbuilds are ordered in-line with our customers preference for high specification jack-up drilling rigs and a strengthening jack-up drilling market. We continue to see solid demand for this asset class with both dayrates and contract duration increasing. These two new orders will increase Seadrill’s jack-up fleet to 28 units and strengthen our position as the largest operator of modern high specification drilling units.”

The offshore drilling industry continues to benefit from strong spending of oil and gas companies worldwide which support the growth in the current newbuild programs. Exploration success in frontier locations such off east Africa such as Tanzania and Kenya and in more developed areas like West Africa, US, GoM and the North Sea provide future opportunities for jack-ups and floaters in an already robust market.

The premium jack-up market continues to improve as recognized in three important indicators; rate, contract durations and contracting lead times have all increased over the past 12 months. The market strength is driven by strong contracting activity in the Middle East, Asia, and Africa. It is further anticipated that demand for large harsh environment jack-ups in the North Sea will remain strong and present interesting
opportunities.

[mappress]
March 5, 2013