Songa sells 2 rigs, establishes joint venture with Opus Offshore; Ensco sells jackup

Songa Offshore has entered into an agreement with Opus Offshore Group for the sale of two rigs and establishment of a joint venture drilling management company, the Songa-Opus JV.

Opus Offshore will acquire 100% of the rigs – the Songa Mercur and Songa Venus – which will be operated by the Songa-Opus JV. Combining the resources of Songa Offshore and Opus Offshore in Asia, the Songa-Opus JV will provide a full suite of services in relation to international drilling operations. The current international operations of Songa Offshore, primarily related to the rigs in Southeast Asia, will be transferred to the Songa-Opus JV. In addition to the Songa Mercur and Songa Venus, the Songa-Opus JV will operate additional assets including Opus Offshore’s Tiger series of drillships currently under construction or on order with scheduled delivery between 2014 and 2017.

The purchase price for the Songa Mercur and the Songa Venus is $200 million, effective as of 1 January 2014. Combined estimated cash flows of $41.6 million accumulated by the rigs between 1 January 2014 and 31 May 2014, is to be reimbursed to Opus Offshore through the settlement mechanism. Total proceeds for Songa Offshore from the joint venture will amount to up to $168.4 million.

Opus Offshore will have an option to acquire Songa Offshores’s 50% stake in the JV for $20 million starting 30 months post inception of the Songa-Opus JV. This option will be valid for a 12-month period.

Separately, Ensco has sold ENSCO 85, a jackup built in 1981, for $64 million. The net book value of the rig was approximately $54 million. The pre-tax gain on this sale was approximately $10 million, which will be included in the Q2 2014 operating results.

“Year to date, we have sold three jackup rigs, and recently we ordered two ENSCO 140 Series jackups,” said Ensco Executive VP and CFO Jay Swent. “Continuous high-grading keeps us at the forefront of industry technology, and we continue to have the largest premium jackup fleet in the world.”

Since the beginning of 2010, Ensco has sold 14 rigs generating pre-tax gains of approximately $90 million. During the same period, Ensco has taken delivery of 12 high-performance rigs, including five Samsung DP3 ultra-deepwater drillships, five ENSCO 8500 Series ultra-deepwater semisubmersibles and two ENSCO 120 Series ultra-premium, harsh-environment jackups. Ensco has eight additional rigs under construction, five premium jackups and three ultra-deepwater drillships, which reinforce the company’s commitment to standardization.