Essar achieves financial closure for Wildcat rig

Essar Oilfields Services Ltd (EOSL), a subsidiary of Essar Shipping Ports and Logistics, has achieved financial closure for the semi-submersible rig, Essar Wildcat.

The company mobilised $240 million through a consortium of foreign and Indian banks for refurbishing the rig to meet the requirements of its client Gujarat State Petroleum Corporation (GSPC).

According to industry sources the Indian banks involved in the process were State Bank of India, Canara Bank and Axis Bank. V Ashok, director, Essar Shipping Ports and Logistics, said the deal was done 2-3 days back and the company was given a four-year facility at competitive terms.

Wildcat, currently anchored in water depths of around 500 meters at the KG basin, was purchased from Trans Ocean in December 2006 for $220 million. The acquisition was funded through equity raised from internal accruals.

The Wildcat rig has completed drilling at the first well for GSPC and is in the process of commencing operations at the second. “The drilling in the KG19 well was completed ahead of schedule. The rig is about to commence work on KG20 as well,” said Ashok.

The current contract with GSPC ends by mid-2010.

Ashok said the Wildcat rig is currently anchored in water depths of around 500 meters.

“At KG19, the rig had drilled to the depth of 5400 meters and is expected to do the same in KG20 as well.”

Essar Shipping is bullish on the offshore oilfield services business and plans to invest $1 billion in this sector. “The funds will be invested till the time we take delivery of two jack-up rigs, for which we will achieve financial closure for Rs 1,250 crore within a month,” said Ashok. Another 1,250 crore will be raised through equity.

Ashok said daily charter rates for jack-up rigs are again started rising after a slight dip owing to the economic slowdown. “Such assets command rates between $1,20,000 and $1,50,000 per day now; we expect the market to hold in the coming months”.

As Essar Shipping acquires new assets, it also plans to tap the offshore and onshore drilling markets outside India. “We are currently looking at opportunities in the offshore and onshore drilling space in regions like Latin America, west Asia, Africa, Asia and Norway, said Ashok.

Ashok said the company has a fleet of 13 land rigs with capacities varying from 250 HP to 2000 HP and one semi submersible rig. These are employed at various locations in India and in Brazil and Syria. “All these rigs are on long-term contracts. Going forward, we expect huge potential in this market and would be open to acquire new assets provided we have a contract in place,” he said.