Rowan Companies plc announced that ARO Drilling, a 50/50 joint venture with the Saudi Arabian Oil Company ("Saudi Aramco"), has commenced operations.
Tom Burke, President and Chief Executive Officer, stated, "We are extremely pleased to announce the launch of ARO Drilling. This is a groundbreaking joint venture that supports Saudi Arabia's Vision 2030, and provides Rowan with an unparalleled long-term growth opportunity throughout the next decade and beyond."
As part of the initial startup of ARO Drilling, Rowan and Saudi Aramco contributed equal amounts of cash into the joint venture. Following these contributions, Rowan sold three of its jack-up drilling rigs to ARO Drilling, including the J.P. Bussell, which was previously idle, and Saudi Aramco sold one of its jack-up drilling rigs to ARO Drilling.
Following the purchase of these drilling rigs, ARO Drilling distributed excess cash in the amount of approximately $88 million to each of Rowan and Saudi Aramco maintaining each party's 50% ownership interests in the joint venture.
Pursuant to the ARO Drilling shareholders' agreement, Saudi Aramco will sell an additional jack-up rig in 2017 to ARO Drilling and Rowan will sell an additional two jack-up rigs to ARO Drilling once they complete their current contracts in late 2018.
ARO Drilling also now manages the operations of Rowan's seven remaining jack-up rigs currently in Saudi Arabia. Rowan and Saudi Aramco have agreed that ARO Drilling will purchase twenty future newbuild rigs that will be constructed by a Saudi Aramco manufacturing joint venture and are expected to be delivered between 2021 and 2030. Each newbuild is expected to have a sixteen year drilling commitment upon delivery to ARO Drilling.