SBI Offshore Commences Negotiations

SBI Offshore Limited announced that the Middle East-Chinese consortium (“Consortium”), which recently awarded its subsidiary a contract to provide design and engineering services for a jack-up drilling rig, has commenced discussions with the SGX Catalist-listed company to build up to five units of the rig (the “Rig” and collectively, the “Rigs”). 

SBI Offshore said that it had commenced negotiations with the Consortium about a week after securing from the latter the US$24 million contract to design a rig that will meet American Bureau of Shipping Classification (? A1 Self-Elevating Drilling Unit) requirements.

The Consortium, whose members are involved in oil and gas activities, has indicated that the Rigs will eventually be deployed in the Middle East and various parts of Asia for operation in water depths of up to 110 meters. 
The price of each Rig will depend on its specifications, equipment type and make, fabrication yard, delivery and financing terms.
If the negotiations are successful, the Group expects to build the first Rig in a regional shipyard, possibly in China or Singapore. Each Rig will take at least two years to build and all the Rigs are expected to be completed in about six years.

Subject to the finalization of the Rig’s specifications under the design and engineering contract as well as the confirmation of the construction start date of the first Rig, the Group expects financial contributions – from rig-building, project management services and sale of equipment – to commence in the financial year ending 31 December 2015.

As announced on 2 July 2014, the Group has formed a 70%-held joint venture (“JV”), Axon Rig Concept and Design Asia Pte. Ltd. (“ARCDA”), with U.S. oilfield equipment manufacturer, Axon Energy Products Inc., to provide integrated solutions for drilling equipment and systems.

Apart from the JV, the Group will continue to add experienced rig and drilling design and equipment engineers to its management team. “SBI Offshore has entered a new phase of growth. The recently concluded design and engineering contract serves as a catalyst for the Group to secure larger onshore and offshore oil and gas projects. We are hopeful of a successful outcome in our negotiations for the Rigs and intend to secure more of such higher-value projects in the future,” Mr. Chan Lai Thong, Executive Chairman of SBI, said.

Leveraging on ARCDA, the Group is actively discussing with various yards in the region to offer its drilling equipment systems and services, as well as with energy resource players in the Middle East and the former Soviet Union for possible collaborations.