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STRAUME, Norway, Nov 30, 2007 - (Hugin via ABN Newswire) - The Company signed a binding Heads of Agreement with Geoenergie GmbH, a German private company with its business in the geothermal market in Germany, for one drilling rig, starting its operations in June 2008, and further an optional drilling rig to start operations in December 2008. Length of drilling contract is five years, extended automatically by 12 months until terminated by customer.
The contract has an estimated value of approx. € 50 mill., excluding optional rig and extensions. Estimated contract value excludes revenues for mobilization, demobilization, customer reimbursables and annual rate escalalations related to inflation indexes.
Geoenergie GmbH has during the contract period the right to terminate the contract with 3 months notice if it turns out that the geothermal business in Germany is not viable. The Company considers the cancellation risk as limited as the federal law ensures a fixed price of 15 €ct/kWh for a period of 20 years, resulting in attractive profitability for the geothermal companies.
Geoenergie GmbH has met all requirements from the mining ministry in Bavaria, and the transfer of the licenses has now been approved. Geoenergie GmbH and Ability Drilling will finalize and sign the formal drilling contract within January 15th 2008.
Ability Drilling is currently also negotiating contracts for several other geothermal projects in Germany, and believes in a rapidly growing geothermal market due to material financial incentives from the government to stimulate investments in renewable energy projects.
Mr. Hans Petter Eikeland, CEO of Ability Drilling, said, "We are pleased with the contract confirming the expected day-rate level for our "state of the art" land rigs". Mr. Eikeland further stated: "Thermal water drilling represents a new fast growing market for land rigs in addition to the oil & gas drilling market. The Ability Drilling rigs are very suitable for such work due to the fact that our rigs cause the least possible damage to environment and immediate surroundings. We will be the first company to use electrified rigs on a global basis. This itself results in extremely limited emissions. Ability Drilling ASA is proud to be the main supplier in this historic project in collaboration with G-Therm Energy & Waters Gmbh, a project that brings hope for a greener tomorrow.
Contact person:
HANS PETTER EIKELAND, CEO e-mail: hpe@ability-drilling.no
Ability Drilling ASA, Mail Box 242, N-5342 STRAUME NORWAY www.ability-drilling.no
Ability Drilling ASA is a Norwegian based onshore drilling contractor. The founders have extensive experience from the offshore drilling market with the ambition to transfer new drilling equipment technologies developed offshore to the onshore drilling market, which has experienced limited technology development during recent decades.
The Middle East and North Africa region is defined as the core market as this area represents 67% of proven oil reserves and 45% of proven gas reserves world-wide, and most of the reserves are located onshore. Due to the strong focus on energy security and greenhouse emissions in Europe, thermal drilling is also defined as a core market.
Ability Drilling ASA has presently a manufacturing program for 42 state of the art 4th generation drilling rigs and 42 work-over rigs. 4 drilling rigs and 2 work-over rig are under construction. The new drilling concept consists of a compact designed drilling package based on the rack and pinion principle. The constructor Sense EDM, aided by the experienced team from Ability Drilling ASA, have implemented all of the lessons learnt related to efficiency and health safety and environment (E-HSE) during drilling in the Norwegian North Sea over the last twenty years.
Our vision is to become a preferred land rig drilling contractor and to deliver excellent performance to our clients, exceeding their expectations of operational efficiency and safety standards.
