Seadrill Ltd. has finalized contracts for four jackup drilling rigs for use by Mexico's national oil company Pemex Exploracion y Produccion, with a fifth due to be agreed in 2Q.
The contracts are for the jackup drilling units West Oberon, West Intrepid, West Defender (pictured at right) and West Courageous.
The fifth contract, for the recently acquired jackup drilling unit, Prospector 3, renamed West Titania, is being processed for approval by Pemex with finalization expected during 2Q 2014.
The contracts are for 6-year terms and total revenue potential from the five contracts exceeds US$1.8 billion.
Seadrill also announced the establishment of SeaMex Ltd., a 50/50 joint venture, with an investment fund controlled by Fintech Advisory Inc. Fintech is a private investment manager founded in 1989 that has a strong investment record and operates in Latin America. SeaMex was formed for the purpose of owning and managing the jackup drilling units working for Pemex as well as to develop and pursue further opportunities in Mexico and other Latin American countries. The gross proceeds from the sale of a 50% share in the five rigs to Fintech is expected to be around US$488 million and will result in a gain recordable in the first half of 2014, Seadrill says.
Per Wullf, Seadrill CEO commented, "This opportunity to expand our relationship with Pemex was partly developed on the back of Seadrill's successful operations with our ultra-deepwater semisubmersible West Pegasus in Mexico.
"The long-term nature of these contracts and the establishment of SeaMex, will create economies of scale in the region. Seadrill sees recent developments in Mexico such as new petroleum legislation, Pemex' expansion plans, and recent large deepwater discoveries as supportive to the great opportunity to expand business within the country.
"By using the joint venture to build up a strong local independent organization with close proximity to our customer, strong focus on education, and a high degree of local content, we expect to be able to create an efficient, high quality, and more cost effective organization. Over time, this will position Seadrill better than a centrally driven organization in what we see as a very attractive market. At the same time, a strong focus on localization benefits the Mexican labor market, the Mexican society, and our clients."
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