HOUSTON, Oct. 19 /PRNewswire/ -- R&B Falcon Corporation (NYSE: FLC)
announces a series of transactions, which substantially improve and clarify
its deepwater contract status and construction program as follows:
-- Letters of intent for attractive new contract commitments for the Henry
Goodrich, Paul B. Loyd, Jr. and M. G. Hulme, Jr. semisubmersibles.
-- A letter of intent from Vastar Resources (NYSE: VRI) to enter into a
term drilling contract for a newbuild fifth-generation dynamically-
positioned semisubmersible.
-- Agreement to purchase a 38% interest in Navis ASA, a Norwegian public
company, which is constructing a newbuild dynamically-positioned ultra-
deepwater drillship.
-- Cancellation of the projects to convert two bulk carriers to
dynamically-positioned drillships, the Peregrine VI and Peregrine VIII.
-- Agreement with Samsung Heavy Industries to construct a newbuild 10,000'
dynamically-positioned drillship.
R&B Falcon has negotiated commitments extending the work backlog for three
of its semisubmersibles. British Petroleum has agreed to extend for a one-
year period the current drilling contracts expected to be completed in May,
1999, for the Henry Goodrich and Paul B. Loyd, Jr. semisubmersibles working in
the U.K. sector based on a dayrate which will fluctuate between $150,000 and
$161,000 depending upon performance. The current dayrate is $142,000. In
addition, Texaco has signed a letter of intent to contract the M. G. Hulme,
Jr. semisubmersible for a three-well commitment expected to last nine months
at a dayrate of $165,000 following completion of the current drilling contract
for another operator in mid 1999.
R&B Falcon has previously announced it had signed a letter of intent with
Vastar Resources to enter into a three-year drilling contract for a newbuild
fifth-generation semisubmersible, designated the RBS-8D, subject to execution
of a definitive drilling contract. Including mobilization fees, the total
contract value is approximately $220 million. This unit will be the second
semisubmersible of this design to be built for the Company at Hyundai Heavy
Industries in Korea. R&B Falcon believes these two units will be the most
technically capable semisubmersibles in the world with the capability to work
in water depths of up to 10,000', as well as harsh environments like west of
Shetland. The Vastar unit, which features an 8,000 ton variable drilling
load, will be dynamically-positioned for initial work as an exploration unit
with the capability to be configured as a moored unit for development
drilling. The Vastar unit is expected to be completed in the fourth quarter,
2000, with a construction cost of $310 million, inclusive of capitalized
interest and soft costs.
Navis ASA is a Norwegian public company which has contracted to build the
Navis Explorer I, a new dynamically-positioned drillship capable of operating
in up to 10,000' water depths. The unit is being built at Samsung with an
expected delivery in the second quarter, 2000. The drillship utilizes a
proprietary designed hull, which in model testing has demonstrated motion
characteristics superior to other ships of comparable size. It will be
outfitted with a drilling package sourced by Hitec ASA , which is similar to
that utilized by R&B Falcon in its first three newbuild units from Samsung.
R&B Falcon is expected to enter into a management agreement to manage the
marketing and operation of the rig. Navis has previously raised $100 million
in equity at a subscription price of 32 NOK. R&B Falcon has agreed to invest
$50 million at a subscription price of 11 NOK in a $120 million second round
equity investment, which is expected to include a $30 million rights offering
to existing shareholders and a $40 million offering of convertible preferred
stock. R&B Falcon's investment will be in the form of cash of approximately
$17 million and, for the balance of the commitment, equipment that can be
utilized in the building of the drillship. After completion of the current
financing, R&B Falcon will own a 38% equity interest before conversion of the
convertible preferred stock. R&B Falcon will be entitled to nominate two
directors to the Navis Board of Directors.
In conjunction with the termination of the Peregrine VI and Peregrine VIII
conversion projects, R&B Falcon will take a charge to earnings in the third
quarter of 1998 of approximately $86 million. The drilling contract for the
Peregrine VI with Mobil and Phillips Petroleum will expire by its own terms on
January 1, 1999. The drilling contract for the Peregrine VIII with Texaco was
canceled by mutual agreement on September 24, 1998. Based upon the provisions
of these drilling contracts and expected rig availability, R&B Falcon does not
believe it has any material liabilities to the oil companies as a result of
the contract terminations.
R&B Falcon has had discussions with Mobil, Phillips, and Texaco wherein
R&B Falcon has offered to provide alternatives to the Peregrine VI and
Peregrine VIII, but no agreements have been reached. The Company cannot
predict whether Mobil, Phillips, or Texaco will elect to enter into an
alternative contract with R&B Falcon.
R&B Falcon has entered into an agreement with Samsung to build a
dynamically-positioned drillship capable of operating in 10,000' water depths.
The vessel, designated Deepwater IV, will have a budgeted cost of $290
million, inclusive of capitalized interest and soft costs, utilizing owner-
furnished equipment originally targeted for use on the Peregrine VIII. The
dynamically-positioned vessel will utilize a hull design similar to that used
for the three newbuild drillships being built by R&B Falcon at Samsung, the
first of which was recently delivered. Deepwater IV is expected to be
delivered in the third quarter, 2000. The commitment is subject to execution
of a definitive shipyard contract. The Company is in discussions with several
major oil companies regarding a term drilling contract for use of the vessel.
As a result of the above events, the Company expects its near-term
borrowing requirements to be lower than its previous estimates. Favorable
payment arrangements have been negotiated with the shipyards building the RBS-
8D and Deepwater IV rigs whereby a substantial portion of the shipyard cost
will be delayed until delivery.
Steven A. Webster, R&B Falcon's President and CEO, commented:
"Our management has been working hard to enhance our deepwater program,
including reducing the uncertainties associated with major-scale
conversion projects. We believe these new developments, including the
changes we have initiated, reflect significant progress for the Company
and its customers. The net result is that we have reduced the risks
associated with our construction program and lowered our near-term
borrowing requirements. At the same time, we have developed alternatives
for our customers to meet their drilling requirements.
In particular, the award of the Vastar contract for the RBS-8D design
semisubmersible as a result of an extensive technical competition reflects
well on our technical capabilities and affirms R&B Falcon's leadership
position in deep water. The two sister semisubmersibles under contract to
Vastar and Shell will be among the most capable drilling units in the
world.
Our newbuilding program in Korea has perhaps been the industry's most
successful. The Deepwater Pathfinder was christened on September 30 and
is enroute to the Gulf of Mexico to begin operations. Its two sister
units are expected to be delivered ahead of the original schedule. In
addition, the RBS-8M semisubmersible newbuild for Shell is also expected
to be delivered on schedule and on budget. The three units being added to
the program will be built in the same yards. As successive units in a
multi-rig building program, these rigs will benefit from the shipyard and
engineering experience with the units in progress. We have a high degree
of confidence that we can continue the success of our current program with
these additional units.
We have decided to proceed with construction of the Deepwater IV despite
not having yet secured a drilling contract due to our significant
investment in the Peregrine VIII drilling package, attractive terms from
the shipyard which minimizes incremental investment and our belief that
the deepwater market will be under supplied as exploration and development
programs get underway in ultra-deepwater. We are confident we can obtain
an attractive term drilling contract in the near future.
We are particularly pleased to become the largest shareholder in Navis
ASA. The Navis Explorer I will complement our existing fleet of DP
drillships, and we are confident we can secure an attractive drilling
contract for the vessel. With the ability to contribute drilling
equipment in return for a large equity interest in a company which has
already raised substantial equity capital to fund construction, we believe
this project will provide attractive returns with minimal incremental
financial risk."
R&B Falcon Corporation operates the world's largest fleet of 118 marine-
based drilling rigs for the international oil and gas industry consisting of
twelve drillships (including six under construction), twelve semisubmersible
rigs (including three under construction), 26 jackups, three submersible rigs,
two tender rigs, 62 barge drilling and workover rigs and a floating production
vessel. R&B Falcon actively markets 103 of these units in the offshore and
inland waters worldwide. R&B Falcon also operates a leading offshore and
inland marine towing and service business. On August 21, 1998, the Company
announced execution of a definitive merger agreement with Cliffs Drilling
Company which will result in addition of sixteen jackups, three self-contained
platform rigs, eleven land rigs and four mobile offshore production units
(MOPU's) to R&B Falcon's fleet.
SOURCE R&B Falcon Corporation
 back to top
Related links:
http://www.rbfalcon.com
Company News On-Call:
http://www.prnewswire.com/comp/118988.html or fax,
800-758-5804, ext. 118988
CONTACT:
Charles R. Ofner of R&B Falcon Corporation,
281-496-5000
|
