Ensco plc announced that a subsidiary of the Company has entered into a 950-day drilling contract with Petroleo Brasileiro S.A. - Petrobras for ENSCO 7500, a 5th generation ultra-deepwater semisubmersible drilling rig that has operated for more than 10 years in the major offshore markets of Australia and the U.S. Gulf of Mexico. Following upgrades to the rig at a shipyard in Singapore, ENSCO 7500 is scheduled to commence operations in third quarter 2011. Petrobras may extend the term for up to 950 additional days at mutually agreed rates.
Chairman, President and Chief Executive Officer Dan Rabun commented, "We are very pleased that Petrobras – a leading operator in the deepwater market – has selected ENSCO 7500 for its latest drilling program. Brazil's deepwater reserves are among the largest in the world and we seek to expand our presence in this growing market."
The day rate is $320,000 under the new contract, subject to adjustments based on variances in operating costs. In addition, should the rig operate in water depths greater than 1,500 meters, the day rate increases by an additional $200 per meter/per day. Ensco is eligible to receive up to a 5% performance bonus on the day rate and will receive a $19 million fee for mobilization and equipment upgrades.
As previously reported, under the prior ENSCO 7500 contract with Chevron in Australia, a demobilization fee of approximately $26 million was payable to Ensco, subject to adjustment based on the terms of the subsequent contract. The $26 million fee has already been received by Ensco and, in light of the new contract for ENSCO 7500 with Petrobras, Ensco will recognize the $26 million fee in fourth quarter 2010 revenues rather than first quarter 2011. As a result, total revenues for fourth quarter 2010 are anticipated to be approximately $400 million, compared to the most recent revenue outlook of $375 - $400 million provided in the Company's 29 October 2010 press release.
