Aker Drilling orders two ultra-deepwater drillships for $1.2B from Daewoo Shipbuilding in South Korea

Source: Aker Drilling

Aker Drilling has signed a Letter of Intent (LOI) with Daewoo Shipbuilding & Marine Engineering Co. Ltd (DSME) for the delivery of two advanced ultra-deepwater drillships, and the option for delivery of two additional drillships. The price per drillship, including spare parts, drilling equipment, construction follow up, and activities up to "ready to drill" is estimated at US $600 million.

“Aker Drilling has a first class operational organization and two harsh-environment rigs equipped for deepwater drilling with stable operations on the Norwegian Continental Shelf. The LOI for the two drillships provides us with the opportunity to participate in interesting growth areas for drilling operations in ultra-deepwaters in areas such as Brazil, the Gulf of Mexico and Western Africa. The company has already commenced the work to establish an experienced construction follow-up team at the yard and an international, competent operational organization,” said president and CEO Øyvind Eriksen in Aker ASA. 

Letter of Intent with DSME

Aker Drilling Offshore Services Public Ltd in Cyprus, a wholly owned subsidiary of Aker Drilling ASA, has signed the LOI with DSME in South Korea for the delivery of the two drillships in the fourth quarter of 2013. 25 percent of the contract value is due at the signing of the final contract agreement at the end of February 2011, and 75 percent will be paid on delivery.

The options with DSME give Aker Drilling the right to have the third and fourth drillships delivered in the second quarter of 2014 and the first quarter of 2015 respectively.

The ships can drill wells up to 12,000 meters deep, at water depths of up to 3,600 meters.

Ultra-deepwater

Strong growth in demand Aker Drilling currently has 440 employees, and the company has a position in the market for drilling operations in areas with deepwater and harsh environments. The deepwater market is the fastest growing of all offshore markets, but due to technological, operational and experience issues, it also has the highest barriers to entry for new competitors.

Half of the global oil and gas discoveries are made in ultra-deepwaters, according to Infield. In 2015, 13 percent of the offshore production will come from ultra-deep oil fields, compared to 3.5 percent in 2010. The rig market participants agree that future exploration will increase in deepwaters and harsh environments. In the coming years, this will lead to an increase in demand for advanced drilling units with well-known technologies.

Efficient operations and solid order backlog

The company’s two rigs, Aker Barents and Aker Spitsbergen, currently generate a significant cash flow from stable operations. In operation, the two rigs have an EBITDA margin of approximately 60 per cent. The rigs are on long term leases, and their total order backlog at the end of 2010 was approximately US $1.2 billion.

The two rigs have delivered a positive development with stable and safe operations throughout 2010 and the beginning of 2011. In the fourth quarter of 2010, Aker Barents and Aker Spitsbergen had a total paid uptime of more than 95 percent.



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