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Honghua to build Orion semi-sub drilling rig worth USD 320m

18th August 2014

Honghua Offshore Oil and Gas Equipment, an indirect wholly-owned subsidiary of Honghua, has entered into a letter of award (LOA) with Orion Engineering and Management Limited for the construction of one European-designed semi-submersible drilling rig

Honghua to build Orion semi-sub drilling rig worth USD 320m
At the same time, Orion has the option to purchase an additional three rig units with the same specification of the rig from Honghua Offshore under the same conditions each respectively at an interval of six-months

It is subsequent to the shipbuilding agreement worth over USD 200m on 14 August, with UDIN Engineering, a Korean offshore engineering company. According to the terms and provisions of the LOA, Orion plans to purchase the rig for a total consideration of approximately USD 320m (excluding owner-furnished equipment), representing 24.5 per cent of the company’s total revenue as of 31 December 2013.

“We have always been emphasizing that Honghua must be innovative and develop its self-developed core equipment in offshore engineering sector,” said Zhang Mi, chairman of Honghua. “Signing the LOA symbolised that the company has started a new chapter of its manufacturing business, and successfully entered into the offshore drilling equipment market.”

At the same time, Orion has the option to purchase an additional three rig units with the same specification of the rig from Honghua Offshore under the same conditions each respectively at an interval of six-months. The rig and option units under the LOA will be equipped with the company’s in-house design and manufacture drilling package.

Meanwhile, Orion will contract a subsidiary of Opus Offshore to supervise the construction of the rig according to the latest regulations and highest quality standards in place within the international offshore exploration and production sector.

 “We believe that it demonstrates client and the market’s recognition on the company’s equipment design and construction capability. Meanwhile, the construction of a series of semi-submersible drilling rigs will capitalise on the strengths of the extraordinary capability of Honghai Crane to fully achieve the innovative concept of ‘onshore manufacturing of offshore equipment’, thus reducing construction cost and production cycle time. The company will continue to develop the offshore engineering business, continuously deepen the global business distribution, to provide inexhaustible momentum for the sustaining and stable development of the group’s business.”

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