Songa gains as Statoil picks option for two more rigs

Songa Offshore SE (OSE: SONG) received an order from Statoil ASA pertaining to the options for two further newbuild "cat D" semisubmersible rigs specified in the LOA for the first two-rig order from the company last summer. The contract value is 2.66 billion USD for a period of eight years. Statoil has options for extensions for extra 12 years per rig four years at a time. The delivery is expected in 2014/2015.

Like the first two, these rigs will be built by Daewoo Shipbuilding & Marine Engineering Co (DSME) at 570 million USD each. The drilling package will be delivered by Aker Solutions (OSE: AKSO). The drigs will be similar in design with the allowing to the possibility to interchange parts and crew.

Statoil enters into the contracts to improve recovery from existing fields on the Norwegian continental shelf. The costs of drilling and well completion can also be lowered. One of the rigs will be used on Norne, Heidrun and Åsgård licences with the other joining Statoil’s strategic fleet in year-round operations in the Barents Sea.

Songa Offshore situation has been pretty challenging and as was mentioned in connection with the Q4 report, the company needs to add to its liquid assets by Q3 this year. These new contracts were seen as increasing the likelihood of that situation being solved as well.

From H2 2012 onward Songa Offshore will operate three semisubmersible rigs from Statoil and with these four further rigs coming in later, Statoil obviously also has an interest in Songa’s continued success. Statoil has provided bridge financing to Songa for 20% of the down payment to DSME. Songa was up more than 10% on Friday.