Houston-headquartered Vantage Drilling Company (NYSE Amex: VTG) reports that it has signed a definitive agreement with Valencia Drilling Company to acquire the rights and obligations under the construction contract for the ultra-deepwater drillship Dragonquest, which has now been completed by South Korea's Daewoo Shipbuilding & Marine Engineering Co., Ltd.
On delivery of the drillship and the closing of the transaction-- both expected next month --Vantage will be required to pay for the final construction payment, project costs, equipment, and spares. The total delivered, in-service cost of the project, including the purchase price agreed with Valencia, will total around $800 million.
Valencia is a wholly owned subsidiary of F2 Capital, a Cayman Islands company and affiliate of F3 Capital, a Cayman Islands company wholly-owned by Hsin-Chi Su, a significant shareholder in Vantage. FBR Capital Markets provided a fairness opinion with respect to this transaction to the Audit Committee of the Vantage Board of Directors.
Paul A. Bragg, Vantage'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."
On delivery, the Dragonquest is expected to be deployed in the U.S. Gulf of Mexico, under an eight-year contract with Petrobras.
"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," said Mr. Bragg.
The 781 ft x 137 ft 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 drillship's hull design has a variable deck load of approximately 20,000 tons.
Vantage's current owned fleet includes four Baker Marine Pacific Class 375 ultra-premium jack-up drilling rigs and the ultra-deepwater drillship, the Platinum Explorer, as well as an additional ultra-deepwater drillship, the Tungsten Explorer, now under construction.
March 21, 2012
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