KS Drilling stalls jack-up delivery from COSCO

KS Drilling, an international drilling company that is part of the KS Energy Group, and COSCO Nantong have mutually agreed to extend, by way of an amendment agreement, the delivery date for a rig that COSCO is building until April 30, 2016. 

The rig was originally scheduled for delivery in first quarter 2014.

To remind, the two companies entered the shipbuilding contract for two drilling rigs based on the LeTourneau Technologies, Inc. WORKHORSE Class design in May 2011. The first rig had been delivered in 2014 while the second jack-up is ready to be delivered.

Under the amendment agreement, the KS Drilling is entitled to take delivery of the rig at any time prior to April 30, 2016. Payment of the rig will be made within 5 working days after the rig has been accepted.

Furthermore, COSCO Nantong and KS Drilling have also agreed that either party will be entitled to sell the rig to a third party if the offer could recover their respective costs, or the parties could negotiate in good faith for a compromised solution to sell the rig.

In the event that prior to April 30, 2016, KS Drilling does not take delivery of the rig or if the rig is not sold; and KS Drillng fails to place a new order for one LeTOURNEAU WORKHORSE or one Super 116E design jack-up drilling rig with COSCO Nantong, KS Drilling will pay interest on any remaining payment on the rig at the rate of three month London Interbank Offered Rate plus 1.5% per annum, calculated from May 1, 2015 to the date of payment to COSCO Nantong.

COSCO said it is not able to ascertain the financial impact of the amendments at this point in time as there is no certainty as to the eventual outcome of the options under the amendment agreement.

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