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Rowan Companies Management Discusses Q2 2012 Results - Earnings Call Transcript

I'll now turn it over to Mark to give you more details on these developments.

Mark A. Keller

Thanks, Matt, and good morning, everyone. After months of anticipation, we are proud to announce the commitment of our first ultra-deepwater drillship, the Rowan Renaissance. We received the binding letter of intent from Repsol for a 3-year global term commencing in the first quarter of 2014.

Immediately after delivery in South Korea in late 2013, the drillship is expected to mobilize to West Africa for the first year of its commitment at an effective day rate of up to $624,000 per day. Repsol currently plans to move the Renaissance to the U.S. Gulf of Mexico for the remaining 2 years, at which point, the effective day rate will be $614,000 per day. We look forward to our partnership with Repsol for this important milestone in Rowan's history.

We continue to see significant strength in the ultra-deepwater drillship market, albeit 2 of the 84 drillships currently in service were contracted at 98% utilization worldwide. Through our internal analysis of expected newbuild units, we anticipate that all 68 drillships will be committed upon delivery based on those already contracted and identified demand.

We believe the market is ready to absorb additional ultra-deepwater units. We are currently tracking active requirements for 23 ultra-deepwater drillships, including several outstanding proposals. While we continue to monitor projects in the frontier regions of the world, the focus of recent tender activity has been the U.S. Gulf of Mexico and West Africa. We will keep you updated on our progress in securing additional commitments for ultra-deepwater fleet.

Turning to the jack-up market. According to IHS Petrodata, there are currently 473 jack-ups worldwide. Demand is currently 391 rigs with total utilization at 83% and marketed utilization at 93%. We have not seen utilization numbers this high since February 2009. And day rate averages among our peer group are up almost $4,000 per day over last quarter, and tender activity remains strong. Considering submitted tenders in Far East, Bizen House [ph] and anticipated projects, we currently see international jack-up demand for 35 units, driven primarily by Southeast Asia, the Middle East and the North Sea markets.

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