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Mermaid Maritime associate extends rig contract at 'materially lower' rates

AN associate of mainboard-listed Mermaid Maritime has snagged a contract extension for a jack-up rig, but at "materially lower" day rates that were flagged by the company as a potential downer on earnings.

The 33.76 per cent-owned associate, Asia Offshore Drilling, won a three-year extension to June 2022 for one of its three jack-up drilling rigs, in a deal with a long-term Middle East client announced on Monday.

The extension is expected to add some US$80 millon to Asia Offshore Drilling's contract backlog.

But Mermaid Maritime also warned that "the contract extension would have had a material adverse effect" on its consolidated earnings per share if it had taken place during the year to Dec 31, 2018, as the day rates for the extension are "materially lower than the previous year's day rates".

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The impact on consolidated net tangible assets per share, meanwhile, would be non-material, it said.

Mermaid Maritime shed 0.1 Singapore cent, or 1.25 per cent, to 7.9 Singapore cents, before the announcement.