Petrobras Extends Ultra Deepwater Ocean Rig Contracts

Photo credit: Ocean Rig

RIO DE JANEIRO, Oct 20 (Reuters) – Cyprus-based Ocean Rig UDW Inc said on Monday that it signed a $1.1 billion three-year contract with Brazil’s state-run oil company, Petroleo Brasileiro SA, to extend a lease on two ultra-deepwater drilling ships.

Petrobras, as the Brazilian oil company is known, will get the ships, the Ocean Rig Corcovado and Ocean Rig Mykonos, for 1,095 days, Ocean Rig said in a statement. The period and price translate into an average rate for each of the vessels of $502,283 per day.

The Corcovado was expected to earn an average day rate of $464,800 and Mykonos $459,700 in the second half of 2014, according to Ocean Rig’s second-quarter financial statements. Ultra-deep water is considered water deeper than 1,500 meters (4,921 feet).

Petrobras is trying to secure drilling equipment to execute one of the world’s largest corporate expansion programs. Much of the company’s five-year plan to invest $221 billion by the end of 2018 will be focused on drilling in new fields, which is expected to help the company’s oil and natural gas liquids output in Brazil rise 53 percent to 3.2 million barrels a day.

In September, Petrobras said it had 39 drill-rigs operating in waters deeper than 2,000 meters. Petrobras officials did not respond to requests for comment.

Nicosia, Cyprus-based Ocean Rig, which operates 13 offshore, ultra-deepwater drill rigs, is 59 percent owned by DryShips Inc , a ship-leasing company based in Maroussi, Greece.

On Monday Ocean Rig also said it had provided DryShips with a $120 million short-term loan to help it pay $700 million of 5 percent convertible notes due Dec. 1, 2014.

The Petrobras agreement boosts the company’s expected future ship-lease revenue to $5.5 billion, Ocean Rig’s Chief Executive Officer George Economou said in the statement.

The Corcovado and Mykonos are both so-called “sixth-generation” drill ships capable of drilling wells while floating in waters up to 10,000 feet deep (3,048 meters) deep. They were built by Samsung Heavy Industries Shipyard in Korea and launched in 2011.

Ocean Rig also said in the statement that it extended the date by which France’s Total SA can agree to one-year renewals of its lease of the Ocean Rig Olympia, now working in Angola, to Feb 27. It can seek a second one-year renewal up to a year after agreeing to the first extension.

Additionally, Ocean Rig said it will pay investors a 19 cent per common share dividend, to be paid on or about Nov. 11 for the quarter ending Sept. 30. Olympia is a sister ship of Corcovado and Mykonos. (Reporting by Jeb Blount and Marta Nogueira)

© 2014 Thomson Reuters. All rights reserved.

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