USA: Hercules Offshore Secures Contract for Newly Bought Rig

Hercules Offshore, Inc. announced yesterday the execution of a definitive agreement to acquire the offshore drilling rig Ocean Columbia from Diamond Offshore Drilling, Inc.

The purchase price is $40 million in cash. Ocean Columbia is a LeTourneau Class 82 SD-C jack-up drilling rig registered and flagged in the Marshall Islands. Subject to customary closing conditions, the Company expects the acquisition to close in May 2012.

“Hercules approached us with an offer to acquire the Ocean Columbia, and we found the terms to be compelling,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “We are principally a floater company, and this transaction will further augment our funds for potential investments in deepwater and ultra-deepwater assets.”

Saudi Aramco contract

Hercules Offshore also announced that it has entered into a three-year drilling contract with Saudi Aramco for the use of the Ocean Columbia. Over this three-year period, the Company expects to generate total revenues of $160.0 million, including a lump-sum mobilization fee, assuming a utilization rate of 98% for the rig. Under the drilling contract, Saudi Aramco has the option to extend the term for an additional one-year period. Prior to commencing work under the contract, the Company expects to spend approximately $45.0 million for repairs, upgrades and other contract specific refurbishments to the rig and to mobilize the rig from the Gulf of Mexico to the Middle East. The Company expects the rig to commence work under the contract in November 2012.

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Offshore Energy Today Staff, March 21, 2012,  Image: LeTurneau