Mermaid's associate bags contract extensions worth US$199m

MERMAID Maritime's associate, Asia Offshore Drilling (AOD), has secured contract extensions for two of its jack-up drilling rigs to serve a client in the Middle East, the oil and gas play announced on Tuesday.

The three-year extensions will continue directly from the current contracts scheduled to expire on April 14, 2020 for its AOD II rig and Dec 31, 2019 for its AOD III rig.

These two units have been working for the same client since 2013, and the total contract values are expected to be about US$98 million for AOD II and US$101 million for AOD III.

However, the extensions were secured at "materially lower" day rates compared with the previous year, Mermaid said. Assuming that the contract extensions had commenced and had been completed within the most recent financial year (Mermaid's last financial year ended Dec 31, 2018), the contract extensions would have had a material adverse effect on the earnings per share of the company on a consolidated basis, Mermaid said.

The company has a 33.76 per cent stake in AOD, with the remaining equity owned by an affiliate of Seadrill Limited.

Mermaid's latest announcement also comes after the counter jumped 31.3 per cent to finish at 15.1 Singapore cents on Monday. Some 103.9 million shares changed hands, making it the most active stock on the Singapore bourse for the day.

In response to queries by the Singapore Exchange regarding its "unusual volume movements", Mermaid on Monday said that another affiliate of Seadrill, as manager for the rigs, has been in negotiation for the contracts extensions, but the documents have not been finalised and executed as at Dec 30.