Pride International Buys Deepwater Semisubmersibles

They can go down to 5,600 feet.
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Contract drilling and services outfit Pride International (PDE) announced that it has become 100% owner of two deepwater semisubmersibles, Pride Rio de Janeiro and Pride Portland.

Both of the semisubmersibles, currently operating in Brazil, are dynamically positioned and capable of operating in water depths of up to 5,600 feet, the company said.

Earlier, the Houston-based company was a 30% stakeholder in these semisubmersibles. It has now bought out the interest of its partner for a cash consideration of $215 million. Certain additional payments contingent on future dayrates are also contemplated.

The transaction would result in the addition of about $283 million of debt to the company's balance sheet.

"This acquisition represents an important step in executing our stated strategy to increase our exposure in deepwater and to take advantage of close-in acquisition opportunities. With this transaction, we were able to grow our deepwater fleet in a core market, without additional construction or operational risk, at a significant discount to estimated replacement cost, and at an attractive rate of return," the company said.

In a related transaction, the company also reached agreement for the cancellation of future obligations under certain existing agency relationships. These are related to five offshore rigs the company operates in Brazil, including the two joint venture rigs. The agreement provided for the payment of $15 million in cash, which the company expects to expense during the fourth quarter 2006.

Shares of the company were trading down 18 cents, or 0.62%, at $28.78 Friday.

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