Diamond Signs Largest Deepwater Drilling Contract in Indonesian History

Niko Resources (TSX: NKO), a Calgary-based independent oil and gas operator, announced yesterday that it had signed a contract worth in excess of $700 million with offshore driller Diamond Offshore (NYSE: DO).

This contract places the 5th Generation semi-submersible Ocean Monarch on a 4-year assignment with an option of an additional year to conduct deepwater exploration in Indonesian waters. Niko is Indonesia’s largest deepwater acreage holder and currently has interest in 16 Production Sharing Contracts (“PSC”) and will utilize this rig to explore drilling its very diverse and extensive exploration portfolio.

The Ocean Monarch is currently enroute via heavy lift transport to Vietnam under a 2-well contract for BP. According to Diamond Offshore, they will be working under a $340k day rate. The Monarch, although build in the 1970s, went through an extensive upgrade period in 2008 and is now rated to work in water depths up to 10,000 feet and a drilled depth of up to 35,000 ft. She is flagged in the Marshall Islands and in an ABS-classed vessel.

The contract is to commence between June 1 and August 15, 2012.