Valaris announced that ARO Drilling, its 50/50 joint venture with Aramco, has secured financing for its first two newbuild jackups, Kingdom 1 and 2. ARO Drilling entered into a $359 million term loan with a syndicate of local Saudi Arabian banks to finance the deliveries, with the proceeds being used to pay the remaining shipyard purchase price for Kingdom 1 and 2 as well as for general corporate purposes. The loan matures in eight years and has a 16-year amortization profile with a 50% balloon payment due at maturity.
Kingdom 1 is expected to be delivered and commence its contract with Aramco in Q4 2023, whereas Kingdom 2 is expected to be delivered and commence its contract with Aramco in Q1 2024. Day rates for the initial eight-year contracts will be determined using a pricing mechanism that targets a six-year payback for construction costs on an EBITDA basis. These initial contracts will be followed by a minimum additional eight-year term and re-priced every three years based on a market pricing mechanism.