Songa Offshore expects to secure financing for remaining rigs

Joseph Keefe April 8, 2014

Norwegian oil driller Songa Offshore is confident it can raise the debt it needs in order to pay for the last two rig newbuilds it has ordered, Chief Executive Bjoernar Iversen told Reuters on Tuesday.

The two units have a combined price of just over $1.3 billion and will be used by oil major Statoil. In total, Songa has four new rigs under construction, of which the first two have secured financing.

"As we have said earlier we have financing in place on the first two rigs for Statoil and there is good appetite for the next two," Iversen said. "We have been at the yard in Korea, we have gone through the rigs, and the delivery plans looks good."

The Cat D rigs, tailor made to fit Statoil's needs, each have eight-year contracts plus additional options of up to 12 years. The first two units are due to be delivered in late 2014, while the last ones are due in the second quarter of 2015.

Songa Offshore raised $425 million in fresh equity and debt at the end of last year and has renegotiated terms with Statoil to secure higher daily rig rates than originally planned.

"We expect financing to go smoothly for the next two rigs because of the rate lift we were given," Iversen said.

As part of the plan, Songa will sell two rigs currently operating in Asia, leaving it with three rigs on long term contracts in the North Sea, plus the four that are under construction.

"I've indicated we should be able to announce a sale by the end of the second quarter," Iversen said.