Maersk Drilling has entered into a definitive agreement to acquire the newbuild harsh environment jack-up rig from struggling rival Hercules Offshore (Nasdaq: HERO).
According to the agreement, Maersk Drilling assumes the right to take delivery of the rig, formerly named Hercules Highlander, immediately from Jurong Shipyard Pte Ltd (Jurong) in Singapore and Maersk agrees to settle the final payment of approximately $190 million.
After delivery, the rig will be mobilized to the North Sea to commence a five-year drilling contract with Maersk Oil and its partners, BP and JX Nippon, on the Culzean gas field offshore UK. The value of the five-year drilling contract is approximately $420 million, including a mobilization fee of $9 million.
The rig was originally ordered in May 2014 for a shipyard cost of $236 million.
The deal comes as Hercules Offshore plans its second bankruptcy filing in just nine months as the company struggles with the ongoing decline in oil prices.
“This agreement represents an opportunity for Maersk Drilling to acquire a newbuild harsh environment jack-up backed by a firm long-term contract. We look forward to working with Maersk Oil and its partners on the Culzean gas field,” says CEO in Maersk Drilling and member of the Executive Board in the Maersk Group, Claus V. Hemmingsen.
The rig design is Friede & Goldman JU2000E, categorized as a 400-foot rig, with 30,000-foot drilling depth and HPHT (High Pressure High Temperature) capabilities. The rig has accommodation capacity for up to 150 personnel.
The rig will enter the Maersk Drilling fleet under the name Maersk Highlander, and after the acquisition, Maersk Drilling’s rig fleet counts 23 rigs with an additional harsh environment jack-up rig under construction.