COSCO subsidiary to build two drilling rigs worth US$525mn each

A letter of intent has been signed by COSCO Nantong Shipyard with Sevan Drilling Rig V and Sevan Drilling Rig VI in respect of 2 turn-key EPC contracts.

According to COSCO, COSCO Nantong will undertake to perform EPC and installation for delivery of two drilling units based on the Sevan design (Sevan 650).

The contract price for each drilling unit is approximately US$525 million.

In addition, under the LOI, COSCO Nantong has also granted options to the Sevan Drilling Group or its nominees pursuant to which the option holders may order up to 2 drilling units similar to those under the EPC Contracts at a price of approx. USD525 million per unit.

The effectiveness of the EPC Contracts is subject to the board approval of each of Sevan Drilling Rig V Pte Ltd and Sevan Drilling Rig VI Pte Ltd and the board approval of COSCO Nantong.

Formal agreements for the EPC Contracts and the options are expected to be signed at a later date.

Deliveries of the drilling units under the EPC Contracts are expected to take place in the fourth quarter of 2013 and second quarter of 2014, respectively.