Norwegian-Cypriot drilling contractor Songa Offshore (OSE: SONG) announced that it’s subsidiary has received a letter of award from Statoil (OSE: STL, NYSE: STO) for two new build semisubmersibles with firm 8 year terms for each. The order contains an option to extend the term to 20 years. Statoil also has an option for two additional rigs.
The firm term of the awarded contract will provide 2.47 billion USD of revenue to Songa and escalation provisions will contribute to a higher contract value upon commencement in 2011. The rigs should be up and running in the Troll-license in 2014.
Rig construction work will be done at the Daewoo Shipbuilding & Marine Engineering Co., Ltd’s yard in South-Korea and Aker Solutions(OSE: AKSO) was selected as the supplier of the drilling equipment by Songa. Aker Solutions already commented on an order from DSME the day before yesterday.
Contract was expected and markets were satisfied with the terms as Songa gained mildly on Tuesday’s trading. The possibility to further strengthen the relationship with Statoil coupled with increased earnings visibility are other positives to take home from the deal. Statoil's chief procurement officer Jon Arnt Jacobsen said the following on their release: “Through joint efforts we intend to rejuvenate the rig fleet on the NCS and ensure that we use the right rig for the right purpose."
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