Diamond Orders Ultra-Deepwater Drillship from HHI for $655 million

Diamond Offshore Drilling, Inc. (NYSE:DO) said Thursday that it has entered into a turnkey contract with Hyundai Heavy Industries Co., Ltd. for construction of a new ultra-deepwater drillship with delivery scheduled in the fourth quarter of 2014. Total cost of the project, including commissioning, spares and project management is expected to be approximately $655 million.

The new drillship, to be named Ocean BlackLion, will be of the same design as Diamond Offshore’s three units currently on order with Hyundai. The design will include dynamic-positioning, dual activity capability, a maximum hook-load capacity of 1,250 tons, and operating capability at water depths up to 12,000 feet, though initially outfitted for operation at 10,000 feet. The unit will also feature two seven-ram blowout preventer stacks, with the second available for use as a spare.

Diamond Offshore also announced that it has elected to equip its previously announced drillships now under construction with an additional seven-ram BOP to improve rig reliability. The cost to add a second BOP is approximately $34 million, bringing the average total price for each of the previously announced drillships to approximately $640 million.

In addition to the drillships, Diamond Offshore says that it has completed the sale of four jack-up drilling rigs in two separate transactions. The Ocean Heritage was sold for $45 million in cash, and the cold stacked mat-supported rigs Ocean Champion, Ocean Crusader, and Ocean Drake were together sold for $10 million in cash.

“We are principally a floater company, and during 2012 we have sold five jack-up rigs for a total of $95 million, which is being reinvested in our fleet,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “We believe this new drillship along with our four additional units under construction—the Ocean BlackHawk, Ocean BlackHornet, Ocean BlackRhino and Ocean Onyx—will be profitably employed in the deep and ultra-deepwater markets.”

Diamond Offshore’s fleet of offshore drilling rigs now consists of 32 semisubmersibles, 8 jack-ups, and one drillship, in addition to the four ultra-deepwater drillships currently under construction.

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