Northern Drilling Ltd. (NODL) Wednesday announced the exercise of its option to purchase the semi-submersible rig Bollsta Dolphin for a total consideration of USD 400 million.

Northern Drilling: Expanding its fleet through exercising of the Bollsta Dolphin option
Caption: Bollsta Dolphin - Image courtesy of NODL

The Bollsta Dolphin is one of the world’s most sophisticated high-end floaters capable of operating in harsh environment areas and in ultra deep waters of up to 10,000 feet. The rig is currently under construction at Hyundai Heavy Industries Co. Ltd (HHI) with expected delivery in January 2019. The Company has the option to take earlier delivery of the rig should favorable contracts with start-up prior to January 2019 be secured.

NODL will make a pre-delivery instalment of USD 200 million with the remaining balance due at delivery. The Company will consider financing the take-out instalment with debt subject to market fundamentals and contracts secured.

The market for harsh environment capable rigs continues to show clear signs of improvement and stands out favorably in the drilling industry with higher utilization and better contract economics.

This has resulted in increased interest from several parties to acquire similar stranded harsh environment rigs at increasing prices. The Company therefore expects asset transactions to be concluded at prices that have a clear positive read-through for the Company’s fleet.

The Company will continue to pursue its strategy of opportunistically acquiring distressed drilling assets, including rigs for shallow and benign operations, balancing opportunism with commercial discipline.

Source: NODL