Rowan Companies PLC (NYSE:RDC) has announced the launch of Aro Drilling in partnership with Saudi Arabian oil firm Saudi Aramco.
The joint venture between the two firms is an equal part venture through which each has contributed an equal amount of revenue for the project. Aro Drilling acquired three of Rowan’s jack-up drilling rigs and one of Saudi Aramco’s drilling rigs. The J.P. Bussell which belonged to Rowan was one of the three rigs acquired and the sale was probably a good move considering that the rig had been idle. Aro Drilling distributed the excess cash to the tune of $88 million equally to the two drilling firms after the acquisition of the drilling rigs as part of maintaining the 50 percent stake that Rowan and Saudi Aramco have in the joint venture.
“We are extremely pleased to announce the launch of ARO Drilling. This is a groundbreaking joint venture that supports Saudi Arabia’s Vision 2030, and provides Rowan with an unparalleled long-term growth opportunity throughout the next decade and beyond,” stated Tom Burke, the president and CEO of Rowan.
Aro Drilling will acquire one more jack-up rig from Saudi Aramco before the end of the year as part of the Aro Drilling Shareholder agreement. It is also expected to purchase two extra rigs from Rowan once the current contracts are completed towards the end of 2018.
Aro Drilling commenced its operations on October 17 and is currently managing the operations of the seven remaining rigs owned by Rowan. Both firms have also struck a deal stipulating that Aro Drilling will acquire 20 new rigs made by Saudi Aramco in the future and these are expected to be delivered between 2021 and 2030. Each of the 20 new rigs to be delivered is expected to feature a drilling commitment of 16 years upon delivery. The joint venture between the two companies also aligns with Saudi Arabia’s growth plan as well as its vision for 2030.
Rowan’s stock closed the latest trading session on Thursday at $13.21 after tanking by 0.23 percent compared to the value of the stock during the previous close.