China's land drilling rig manufacturer Honghua Group Ltd. announced Sunday that its indirect wholly-owned subsidiary Honghua Offshore Oil & Gas Equipment (Jiangsu) CO.,Ltd. inked a legally binding Letter of Award (LOA) Aug.
16 with Orion Engineering and Management Limited (Orion) for the construction of an European-designed semisubmersible drilling rig, worth approximately $320 million excluding owner-furnished equipment. Under the LOA, the Sales and Purchase Agreement has to be executed within 60 days. The agreement also provides Orion with an option to purchase 3 similar-specification semisubmersible rigs under the same terms from Honghua Offshore at half yearly interval.
The rig and option units will be equipped with Honghua Offshore’s in-house design and manufacture drilling package. Meanwhile, Orion has engaged a subsidiary of Opus Offshore Ltd. to supervise the rig construction, which will enable Honghua Offshore to become a world class supplier in the global offshore drilling market. “Signing the LOA symbolized that the Company has started a new chapter of its manufacturing business, and successfully entered into the offshore drilling equipment market ... the construction of a series of semisubmersible drilling rigs will capitalize on the strengths of the extraordinary capability of Honghai Crane to fully achieve the innovative concept of ‘onshore manufacturing of offshore equipment,” Zhang Mi, chairman of Honghua commented in a press release.