Prospector in new charter delay

High and dry: arrival of Prospector 1 at Cromarty Firth port in Scotland late last year

Prospector Offshore Drilling faces a further costly delay to start-up of a charter with Total for its first newbuild jack-up as the Oslo-listed rig contractor prepares to take delivery of a second unit next week.

The Prospector 1, delivered from Chinese yard Dalian Shipbuilding Offshore Industry late last year after a nine-month delay, was originally due to start work for the French supermajor early this year under a 730-day contract at a dayrate of $195,200.

The company has been receiving a reduced dayrate due to ongoing installation of third-party equipment on the rig that Prospector previously said was expected to be completed in late April ahead of deployment of the unit at Total’s Franklin field off the UK later in the second quarter.

However, the charter with full dayrate is now not expected to start until the third quarter, with the drilling site still being prepared to receive the rig, according to a Prospector statement on Friday.

Prospector was earlier forced to pay $1 million in compensation to Total for late delivery of Prospector 1 that was due to start work on the contract in January.

Prospector has now secured an amendment to a recently minted debt financing package totalling $370 million to take account of the changed charter scenario entailing the waiver of a requirement for contract start-up in return for a $45 million guarantee from major shareholders Skeie Technology and Ferncliff.

The company will draw down a total of $190 million from a credit facility and bond loan that comprise the package to take delivery of the second newbuild, Prospector 5.

The copycat Friede & Goldman JU-2000E-design harsh-environment jack-up, also chartered by Total on a three-year contract, is expected to be delivered from China’s Shanghai Waigaoqiao Shipbuilding (SWS) on 16 June, the company stated.

The unit is expected to start work for Total off the UK under the contract in September in line with the schedule.

Prospector suffered a first-quarter loss of $16 million, versus $12.5 million a year earlier, as operating costs ballooned 27% year-on-year to $13.6 million while the reduced dayrate on the first rig left it with only $1.7 million in revenue, compared with $1 million in the same period of 2013.

The company said it expects operating costs to further increase in the second quarter due to delivery of Prospector 5.

The contractor has three additional similar newbuilds under construction at SWS that are due for delivery over the next three years, though has yet to line up firm contracts for the units, and also has an option for another rig.

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