ARO Drilling Joint Venture Overview
3 Newbuild Rigs: Overview and Financial Impact
Overview:
ARO intends to build 20 jackups over the next decade
The first two jackups were built at the Lamprell shipyard in UAE.
Kingdom 1 was delivered in 4Q23, and Kingdom 2 is expected to
be delivered in 1Q24
Remaining shipyard purchase price for Kingdom 1 and 2 was
financed by a $359 million term loan. The loan matures in eight
years and has a 16-year amortization profile with a 50% balloon
payment due at maturity
Thereafter, new rigs will be built at the new Maritime Yard - The
King Salman International Complex for Maritime Industries and
Services, a cornerstone project in the Saudi 2030 Vision
The Maritime Yard is a joint venture between Saudi Aramco,
Bahri, Hyundai Heavy Industries and Lamprell
Newbuild rigs will be designed fit-for-purpose for Saudi Aramco
operations. The first two newbuild rigs are based on the
LeTourneau 116E design
VALARIS
Financial Impact:
.
•
Day rates for the initial eight-year contracts will be determined
using a pricing mechanism that targets a six-year payback for
construction costs on an EBITDA basis
These will be followed by a minimum of another eight years of
term, re-priced every three years, based on a market pricing.
mechanism
The market pricing mechanism is based on a global index of
similar rigs (excluding Norway and other niche harsh
environment markets) with a modest discount to market, and a
floor that provides a minimum level of profitability
Thereafter, if the rigs meet the technical specifications and the
operational requirements of Saudi Aramco, preference for new
Saudi Aramco drilling contracts will be given to these rigs
Newbuild rigs impact ARO net income, 50% of which flow
through equity in earnings of ARO line in Valaris' income
statement
8View entire presentation