Rowan Companies Plc (NYSE:RDC) has updated its drilling rig status and contract report titled the ‘Fleet Status Report’. The company will be providing its quarterly updates to the report before its earnings.
By the end of last year, Rowan Companies and Saudi Aramco came into a 50-50 joint venture. In this new venture, the two companies will possess, operate and manage offshore drilling units in Saudi Arabia. The new partnership with Saudi Aramco will enhance the long-term growth between the two companies by benefiting from each party’s unique contribution.
For instance, Rowan will offer the joint venture the drilling expertise and support the training and development of the local drilling workforce. At the same time, through a long-term partnership with the Saudi Aramco, Rowan will gain a high demand and the scale and overall growth through the economies of scale in the market.
The two companies will jointly contribute $25 million to make the most use of the new joint venture. Also, the Saudi Aramco will supply two jack-up rigs and other related assets. Rowan will contribute the three jack-up rigs, that is, the Gilbert Rowe, Bob Keller, and JP Bussell. The company will also supply the partnership with the shore-based facilities and other related assets.
Since the contributions are not balanced, Saudi Aramco will in addition supply the needed extra cash to retain the 50-50 ownership divide. Furthermore, by 2018, Rowan will supply the Hank Boswell and Scooter Yeargain so as to complete their current partnership contracts. At the same time, Saudi Aramco will give an equivalent value. The joint venture has plans laid in place to purchase up to 20 rigs which will be delivered for the next 10 years that is expected to commence from 2021 to achieve and maintain the in increasing demand for the base load offshore drilling services in Saudi Arabia.
For Rowan and other offshore drilling companies to survive the current industry recession, they will be forced to reduce their operating costs.