Offshore staff

HAMILTON, Berumda -- Seadrill and Ship Finance International have agreed on a combined sale and leaseback arrangement whereby Seadrill will sell the ultra deepwater semisubmersible rigs West Hercules and West Taurus for a total consideration of $1.7 billion and simultaneously lease the units for a 15-year period.

Under the sale and leaseback arrangement, Seadrill has five options to repurchase the West Hercules during the charter period and a repurchase obligation at the end of the term. The first repurchase option may be exercised after three years at $580 million, while the repurchase obligation after 15 years is $135 million.

West Hercules is in its final stages of commissioning at the Daewoo yard (DSME) in Korea and is expected to be delivered in September. The semisubmersible is chartered to Husky under a three-year contract at an estimated day rate of $524,000. Start-up of operations is scheduled subsequent to delivery and a short transit period to the drilling location offshore China.

Under this sale and leaseback arrangement, Seadrill has four options to repurchase the West Taurus during the charter period and a repurchase obligation after 15 years. The first repurchase option may be exercised after six years at $418 million while the repurchase obligation will be $149 million.

West Taurus is currently under construction at the Jurong Shipyard yard in Singapore. The commissioning and testing of the equipment is under way and the unit is scheduled for delivery in December, the company says. The semisubmersible rig is chartered to Petrobras for operations in Brazil under a six-year contract at an estimated day rate of $630,000. Operations in Brazil are scheduled to begin in February 2009, following transit from Singapore.

09/16/2008