Cosco seals with $1b contract for two EPC rigs

The deal, which was signed last March., comes with options for two more ships.

The Sevan contract comes with options for two more rigs. The two drilling units are based on the Sevan 650 design and the price for each is approximately US$525m. Delivery of the units is expected to take place in 4Q13 and 2Q14, respectively.

Cosco’s share price took a hit when its parent company was reported to be facing queries because of accounting irregularities, stoking further market fears about the corporate governance of Chinesecompanies. However, it was clarified that the group itself was not subject to these queries, thereby helping to soothe the market.

Concerns were also raised about the viability of funding of the Sevan drilling units, given the financial woes of Sevan Marine, as well as the difficult initial listing of its offshoot Sevan Drilling. The formalisation of these contracts mitigates the risk somewhat.