OilVoice - Ability Drilling Enters Into Panama Based Joint Venture with MIPPSA de CV

Ability Drilling Enters Into Panama Based Joint Venture with MIPPSA de CV

Friday, January 16, 2009

Ability Drilling has entered into a joint venture with MIPPSA de CV (“MIPPSA”), a company registrered in Mexico, and Energy Services Corporation Ltd. (“ESC”), a Panama registered company. The purpose of the joint venture is to own, lease out and perform maintenance on the 150 T rigs. Each of the three parties will own 1/3 of the joint venture, which will be registered in Panama. As part of the agreement, the joint venture has committed to buy three 150 T rigs from Ability Drilling and has also secured an option for another three 150 T rigs from Ability Drilling. The first two rigs will be employed in Mexico, on three year contracts with client Pemex.

The 150 T rigs will be applied as drilling rigs. The three rigs to be purchased from Ability Drilling are the Ultra Light Drilling Rig, Workover rig 1 (which has been constructed, but will be converted into a drilling rig) and Workover rig 2 (which is under construction and will be converted into a drilling rig later).

The joint venture has submitted an application for long term financing of the planned purchases through export guarantees from EDC (Canada). While this application is being processed, Ability Drilling will lease the Ultra Light Drilling Rig to MIPPSA at market rates.

The joint venture will work actively to win further contracts and expand the business. There is a significant demand for 150 T drilling rigs in both Mexico and in the US.

Hans Petter Eikeland, CEO in Ability Drilling, commented: “This joint venture agreement allows us to lift the first three 150 T rigs out of our balance sheet. This will reduce our funding requirements and financial expenses. At the same time the rigs are secured employment through the joint venture and we will get the benefit from immediate cash flow”.