MercoPress. South Atlantic News Agency

Oil rig operating in the Falklands signs three year contract off Norway

Leiv Eirikson arrived from Greenland and is expected to return northbound end of 2012, beginning 2013

A consortium of companies appears to be spending a large day-rate on an Ocean Rig unit which has been fixed for a firm three years off Norway. The semi-submersible Leiv Eiriksson, currently operating in Falklands waters has been wrapped up for a 15-well program over a minimum of 1070 days on the Norwegian Continental Shelf, Greek rig owner Ocean Rig said on Monday.

The company, controlled by Greek shipping magnate George Economou, said the total revenue backlog for the three-year period is 653 million dollars without specifying the mobilisation fee. The unit is currently on charter off the Falkland Islands from where it will head to Norway.

The consortium, the members of which were not revealed by Ocean Rig, also holds three further options to keep the Leiv Eiriksson. Each option is for six wells while the options “have to be exercised well in advance of the expiry of the firm period”.

Although Ocean Rig did not provide a breakdown of the financials relating to Monday's deal, taking the total revenue sum for the minimum 1070 day period equates to a day-rate inclusive of mobilisation and any possible bonuses of around 610.300 dollars. Current flat day-rates for such units are around 550.000 dollars and above.

The new contract will being in either the fourth quarter this year of the first quarter of 2013.

The Leiv Eiriksson is currently fulfilling a two-well program for Borders & Southern Petroleum off the Falklands. It will then head to the Loligo prospect, also off the Falklands, to drill for Falkland Oil & Gas.

The rig arrived in the Falklands having left Greenland where it drilled a number of dusters for Cairn Energy. It achieved some degree of notoriety in the region as it became the focus for a sustained and high-profile protest by Greenpeace activists against Cairn's Arctic drilling program.

Likewise the arrival of the rig to Falklands’ waters has been met with an escalation of the UK/Argentine ongoing sovereignty dispute.