Seadrill Orders Another Harsh Environment Semi, Wins $235M Contract from Chevron

To benefit from the current strong demand for high specification drilling units Seadrill announced today that it has entered into a turnkey construction contract with Hyundai Samho Shipyard for the construction of a new harsh environment semi-submersible drilling rig.

The new rig will be a sister rig of the harsh environment semi-submersible unit Seadrill’s subsidiary, North Atlantic Drilling, currently has under construction at Jurong Shipyard in Singapore.

The new rig will be of a Moss CS60 design, N class compliant and be fully winterized to meet the harsh and demanding weather conditions in the North Atlantic areas. In addition, the new rig will have premium ultra deepwater capabilities including water depth of up to 10,000 feet. The new rig is scheduled for delivery in the fourth quarter 2014.

Alf C Thorkildsen, Chief Executive Officer in Seadrill Management AS says in a comment:

“Based on the enquiries we receive from the major oil and gas companies and the current high oil prices, we are comfortable that the aggregate demand for modern floaters will exceed the supply of available units for several years to come. We are pleased that the good relationships Seadrill and the Fredriksen group have with the top quality yards have allowed us to get access to attractive delivery slots at competitive terms. With an expected strong cash flow from our solid contract backlog we are well positioned to secure attractive financing for our new building program. As a result we remain positive to the prospects of continuing to show higher growth and deliver better operational and financial performance than our peers in an industry that looks very attractive for the years to come.”

Total estimated project costs is less than US$650 million including a turn key yard contract with a back-end loaded payment structure. In addition, Seadrill has agreed a fixed price option for one further unit from the yard. Seadrill has already received charter interest in the firm unit. With the strong demand Seadrill feels it is likely that the option will be exercised. However, a final decision will not be taken before August 2012.

Seadrill’s construction program now totals 18 units, including 6 drillships, 2 harsh environment semi-submersibles, 5 tender rigs and 5 jack ups. In addition to the rigs under construction, Seadrill also controls several fixed price options at various yards.

In addition, Seadrill also announced that they have received a five-year contract valued at US$235 million for the tender assist rig T18 by Chevron Thailand Exploration and Production Ltd which will commence operations in the first quarter 2014 following the delivery to Chevron of tender assist rigs T15 and T16 during 2013.

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