A Review of the Nigerian Energy Industry

Tullow hires rig for Ghana job, takes stake in Kenya

7 October 2011, Sweetcrude, Accra – Tullow Oil has offered Norwegian rig owners, Seadrill, a lucrative rig charter contract for a one-year deal off Ghana.

And in Kenya, an arm of the UK-based Tullow secured, Friday a 15% stake in Kenya licence L8, following completion of a farm-out by Australia’s Pancontinental Oil & Gas.

The rig contract off West Africa is worth at least $204 million for West Leo, Seadrill’s last ultra-deepwater semi-submersible newbuilding on order at Singapore’s Jurong Shipyard with delivery expected in late January.

The rig will head straight for the Tullow job which is slated to begin in mid-April.

The contract price also includes an $18 million mobilisation fee, meaning an approximate dayrate of $509,600. However, the contract also allows for a 10% daily bonus depending on performance.

Earlier on Friday Seadrill announced it had tied up a five-year charter for its other remaining ultra-deepwater newbuilding rig at Jurong to an unidentified oil major. The deal for the West Capricorn is worth $919 million meaning a dayrate of approximately $487,000.

Tullow’s acquisition of 15% stake in Kenya’s licence L8 was formally approved by Kenya’s Minister of Energy, after the company had first agreed to take 10% of the offshore block, which contains the giant Mbawa prospect, in March.

Tullow acquired a further 5% in the block from Origin Energy earlier this year.

Both Pancontinental and Tullow will hold 15% each following the move, though Tullow will have an option to earn another 5% by providing further funding on behalf of both companies after the first earning phase is completed.

Based on current budgets, Tullow will free carry Pancontinental through a major part of the L8 exploration programme, including the drilling of the Mbawa prospect.

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