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USA: Hercules Offshore Secures Contract for Newly Bought Rig

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Hercules Offshore, Inc. announced yesterday the execution of a definitive agreement to acquire the offshore drilling rig Ocean Columbia from Diamond Offshore Drilling, Inc.

The purchase price is $40 million in cash. Ocean Columbia is a LeTourneau Class 82 SD-C jack-up drilling rig registered and flagged in the Marshall Islands. Subject to customary closing conditions, the Company expects the acquisition to close in May 2012.

“Hercules approached us with an offer to acquire the Ocean Columbia, and we found the terms to be compelling,” said Larry Dickerson, President and Chief Executive Officer of Diamond Offshore. “We are principally a floater company, and this transaction will further augment our funds for potential investments in deepwater and ultra-deepwater assets.”

Saudi Aramco contract

Hercules Offshore also announced that it has entered into a three-year drilling contract with Saudi Aramco for the use of the Ocean Columbia. Over this three-year period, the Company expects to generate total revenues of $160.0 million, including a lump-sum mobilization fee, assuming a utilization rate of 98% for the rig. Under the drilling contract, Saudi Aramco has the option to extend the term for an additional one-year period. Prior to commencing work under the contract, the Company expects to spend approximately $45.0 million for repairs, upgrades and other contract specific refurbishments to the rig and to mobilize the rig from the Gulf of Mexico to the Middle East. The Company expects the rig to commence work under the contract in November 2012.

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USA: Vantage Drilling Buys Dragonquest Drillship

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Vantage Drilling Company has signed a definitive agreement to acquire the rights and obligations under the construction contract for the ultra-deepwater drillship known as Dragonquest from Valencia Drilling Corporation, a Marshall Islands corporation for a purchase price of approximately $164 million.

Upon closing of this transaction the Company will be responsible for funding the remaining construction-related payments for the Dragonquest. In addition, Vantage has agreed to pay up to $5 million of Valencia’s costs and expenses at closing. The closing of the acquisition is subject to specified closing conditions.

The Dragonquest was constructed at Daewoo Shipbuilding & Marine Engineering Co., Ltd. (“DSME”) in Okpo, Korea. Construction has been completed on the vessel, and upon delivery of the Dragonquest and the closing of the transaction, Vantage will be required to make expenditures for the final construction payment, project costs, equipment, and spares, and the total delivered, in-service cost of the project, including the purchase price under the agreement with Valencia, totaling approximately $800 million. The closing of the transaction and the delivery of the Dragonquest are currently expected to take place in April 2012.

Paul A. Bragg, the Company’s Chairman and CEO, commented, “We are excited to acquire the Dragonquest as we continue to build one of the most modern and technologically advanced offshore drilling fleets in the world, and expect to complete the acquisition and take delivery of the rig in the coming weeks.

“We have managed the project since its inception in 2008, so we have the highest confidence in the quality and capabilities of the asset we are buying.”

Upon delivery, the Dragonquest is expected to be deployed in the U.S. Gulf of Mexico, pursuant to an eight-year contract with Petrobras. Bragg continued, “Beginning in the third quarter of 2012, we expect the Dragonquest to generate $140 to $150 million of EBITDA per year or approximately $1.2 billion over the life of this contract.”

The Dragonquest is equipped for drilling in water depths of up to 10,000 feet, with a total vertical drilling depth capacity of up to 40,000 feet. The Dragonquest’s hull design has a variable deck load of approximately 20,000 tons and measures 781 feet long by 137 feet wide.

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Contractors in BOEMRE’s sights

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Eoin O'Cinneide & news wires  
25 April 2011 22:44 GMT

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) is looking to be able to bypass Congress in order to bring contractors under more control, Reuters reported on Monday.

The move follows the publication on Friday by the US Coast Guard of volume one of a report into the Macondo blowout disaster in the Gulf of Mexico last April which laid much of the blame at the doorstep of contractors such as Transocean.

“There is no…credible reason why you shouldn’t at least have the ability to proceed against contractors, without in any way having that detract from your ability to hold the operator liable,” BOEMRE’s director Michael Bromwich told the newswire at a conference.

“You can hold multiple entities liable,” he continued.

While the Bureau checks if it can press ahead in this regard without congressional action, it will not yet be taking any action against contractors involved in the Macondo disaster.

“It is actually looking more like we may not need additional authority and that we may have authority under current law,” Bromwich commented.

US player Transocean was the focus of much of the USCG’s attention in Friday’s report into the disaster which also pointed the finger of blame at crew of the ill-fated rig Deepwater Horizon, its flag state Marshall Islands, supermajor BP and even the USCG itself.

Original Article

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