Maersk Drilling has agreed to acquire the newbuild harsh environment jackup rig Hercules Highlander from struggling US drilling contractor Hercules Offshore.
Hercules was awarded a five-year contract by Maersk Oil for use of the rig on the Culzean high-pressure, high-temperature (HPHT) development project in the UK North Sea in May 2014, with work due to start mid-2014.
Last year, Hercules filed for Chapter 11 bankruptcy, emerging from that in November 2015 with a reorganization and forming a new entity, but the firm is still in a forebearance agreement with certain lenders and is still looking for alternatives so secure its financial stability, including a potential recapitalization, and or selling or merging with another business. Selling the Hercules Highlander was also on the cards. Hercules has a fleet of 27 jackups and 19 liftboats.
The rig, an enhanced Friede & Goldman JU-2000E design, will now be delivered to Maersk Drilling, "immediately," from from Jurong Shipyard in Singapore. It has a 400ft water depth rating, 30,000ft drilling capacity, 2 million pound static hook load, 75ft cantilever reach, off-line pipe handling capability, 15,000 psui blowout preventer, HPHT rating and accommodation for up to 150 people.
The shipyard cost of the rig was estimated at US$270 million. As part of the deal, Maersk Drilling will settle a final payment of about $190 million with Jurong.
After delivery, the rig will be mobilized to the North Sea to start its contract with Maersk Oil. The value of the five-year contract is about $420 million, including a mobilization fee of $9 million. The contract includes two one-year unpriced options.
In April, Ocean Rig acquired the sixth generation ultra-deepwater drillship Cerrado following its owner, Brazil based Schahin Group going into bankruptcy.
Ocean Rig paid $65 million at auction for the unit, built at Samsung Heavy Industries' yard in South Korea in 2011. Yesterday, Seadrill CEO Per Wullf said that even though Ocean Rig paid a 10th of the Cerrado's new build cost, it was probably too much for a rig that hadn't worked for a year. He told Bloomberg the asset represents a "pure liability."
Read more
Third year of decline for drilling market
Image: A Hercules unit.
Subscribe
