Ocean Rig UDW Inc. announced the following:
- The Company has agreed to lend its parent company, DryShips Inc. ("Dryships"), up to $120m of immediate liquidity through a short-term unsecured loan. The proceeds will be used, if needed, to repay Dryship's 5% Convertible Notes maturing in Dec. 1, 2014.
- The Company has declared its third consecutive quarterly cash dividend with respect to the quarter ended September 30, 2014, of $0.19 per common share, to shareholders of record as of October 31, 2014, and payable on or about November 11, 2014.
- Ocean Rig has been awarded extensions of the drilling contracts for its two ultra deepwater drillships, the Ocean Rig Corcovado and the Ocean Rig Mykonos by Petroleo Brasileiro S.A. ("Petrobras") for drilling offshore Brazil. The contract extensions are subject to partner approvals. The term of each extension is for 1,095 days with a total combined revenue backlog of over $1.1 billion, excluding reimbursement by Petrobras for contract related equipment upgrades. The new contracts will commence in direct continuation from the end of the current agreements with Petrobras, in Q1 and Q2 of 2015.
- The Company signed an amendment with Total E&P Angola to extend the date by which Total E&P Angola should exercise the option to extend the term of the contract for two additional one-year periods. The first option is now exercisable until February 27, 2015 and the second option exercisable within one year after the date of exercise of the first option.
George Economou, the Company's Chairman and Chief Executive Officer, commented:
"We are delighted to announce another quarter of solid operational performance by Ocean Rig, attributed mainly to the Company's the high utilization rate of approximately 98%. We are also excited with the extension for the contracts for the Corcovado and the Mykonos which brings Ocean Rig's total backlog to $5.5 billion, On the back of this solid backlog, the Company also announced its third consecutive quarterly dividend payment of $0.19 per share.
"Petrobras contract extensions and TOTAL's LOI extension for the Olympia is a positive sign for the future prospects of the UDW market. We see various requirements from clients for additional drilling programs in Angola. We believe that as oil companies are finalizing their budgets for 2015, we will get a much clearer picture of the long term supply and demand balance, which may be tighter than market expectations.
"We do not believe that the current stock price of Ocean Rig reflects the true value of company, which stock price has be adversely affected by the recent volatility of the oil price. The loan from Ocean Rig to Dryships is just a backstop in case Dryships need more time to execute on its various alternatives to refinance its Convertible Notes due December 1, 2014, and will be repaid as soon as possible.
"Ocean Rig with its high specification, pure play UDW fleet and solid balance sheet and backlog is uniquely positioned amongst its clients. Ocean Rig's newbuilding program in 2016 and 2017 provides further growth into a market we believe in and its solid backlog supports for dividends and other value creation initiatives, such as the MLP."
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