Just read that RIG signed agreements with CVX, a large PACD client in the USGOM, for 2 long term
drill-ship contract extensions.
Both the Inspiration and the Clear Leader, which are 6th generation rigs are capable of drilling in
up to 12,000 feet of water, carry the 18.5 inch, 15,000 psi BOP. Both of these drill-ships were/are
working for CVX on existing long term contracts. Each of these drill-ships were extended for 5 additional years at an avg day rate of about $ 587,500
I find these data important because PACD has drill-ships working for CVX in the USGOM. PACD Santa
Ana operates under a 5 year contract at $ 489,000 per day. PACD Shavav starts in the USGOM in
2Q of 2014 on a 5 year contact at $ 555,000 per day
PACD Meltem is available in 3Q of 2014, will be a 7th generation drill-ship, and I hope it could command
at Least 5 years at $ 595,000 per day with CVX. That would add about a $ 1.085 in added backlog to
PACD. I am hopeful that PACD can secure a deal in the USGOM in the next 12 months for either the
Meltem or the Zonda....while the other drill-ship is contracted for over $ 660,000 per day in West Africa
or SE Asia.
I think today's RIG contract announcement tells PACD what PACD's largest customer is willing to sign
in long term USGOM leases. I am hopeful that PACD, with its newer 7th generation ships, with best of
class dual gradient technology, now operating in this same region, could secure a $ 600,000 day rate
in the coming months.
I plan for a $ 595,000 rate but hope to see a $ 600,000+ USGOM number for PACD's brand new sister
rigs to the current CVX/PACD Santa Ana ship. I hope that PACD can command a slight premium for
its new 7th generation rigs, compared to RIG's 6th generation ship, over the next 12 months.
The next USGOM contract will tell investors if PACD's 7th generation ships are truly technologically
and operationally superior to other vendor's recently built driller's ships.......
Given how much CVX is paying PACD to lease all their ships and their stated objective to increase their exposure to ultra-deepwater drilling, it seems like its just a natural for CVX to just buy PACD for their technology and capacity. And if CVX doesn't, someone else likely will (SDRL, RIG?). Seems like a completely asymmetrical risk/reward situation. Lots of upside. Very little downside. Just buy the stock and let it play out.