Petrobras Approves 26 Rigs for 15-year contracts with Sete and Ocean Rig

[rob]

This just in from Petrobras...

Approval of 26 drilling rigs contract

Petrobras announces the result of the negotiation with Sete Brasil and Ocean Rig, which had submitted offers for the charter and operation of drilling rigs to be manufactured in Brazil.

The Company approved the contract for 21 offline rigs with Sete Brasil, at an average daily rate of US $530,000 and the contract for 5 dual activity rigs with Ocean Rig, at the average day rate of US$ 548,000, both for a 15-year term.

All units, which have local content requirements ranging from 55% to 65%, are to be delivered within 48 to 90 months, according to the schedules established in the contracts. The project includes the construction of new shipyards in the country and the use of existing infrastructure.

The contract also includes the possibility of reducing average daily rates if PIS/COFINS exemption is granted and depending on the final financing conditions agreed between the companies and the Brazilian Development Bank - BNDES. Petrobras expects to reduce the average daily rates to US$ 500 thousand for the Sete Brasil contract and to US$ 535 thousand for the Ocean Rig contract. These amounts may suffer further reductions if the parties detect and agree to mechanisms that reduce operating costs.

With these contracts, the Company completes the plan to contract 28 drilling rigs to be built in Brazil to meet the demands of the long-term drilling program, primarily for use in pre-salt wells. Based on the conditions submitted by the companies and on the current demand for the development of future projects, the Company chose to take advantage of the negotiated conditions and contract five additional which were not originally planned.

[Mikey]

$76.3 billion over 15 years