Niko signs deepwater drilling contract for Indonesia

Niko Resources Ltd., Calgary, signed a drilling contract to use Diamond Offshore Drilling Inc.’s Ocean Monarch semisubmersible, currently moored, offshore Indonesia. The contract covers 4 years and has a 1-year option.

The Ocean Monarch is capable of operating in 10,000 ft of water with a drilled depth of up to 35,000 ft. With the option year exercised, this contract is in excess of $700 million, Niko said.

Raymond James & Associates Inc. issued a Nov. 9 research note saying, “Such strong contract terms are further evidence that offshore markets (both floater and jack ups) continue to improve.”

Niko said the contract is expected to commence sometime during June through August 2012 following completion of the semi’s current contract and a routine 5-year hull inspection.

“This contract removes the risk of rig availability for the company’s planned massive drilling campaign,” Niko said Nov. 8, calling the agreement the “largest deepwater exploration contract in the history of Indonesia.”

Niko is Indonesia’s largest deepwater acreage holder with interest in 16 production-sharing contracts. Niko has exploration and production assets in India, Bangladesh, Indonesia, the Kurdistan region of Iraq, Trinidad, Pakistan, and Madagascar.

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