Entered into the LOA for Offshore Rig Construction with Orion With the Total Consideration of Approximately US$320 Million
soruce：manager click：5553 time：2014-08-17
(17 Aug 2014, Hong Kong) A leading global land drilling rig manufacturer – Honghua Group Ltd. (Stock Code: 196.HK) (“Honghua” or the “Group”), is pleased to announce that Honghua Offshore Oil & Gas Equipment(Jiangsu) CO.,Ltd. (“Honghua Offshore”), an indirect wholly-owned subsidiary of Honghua, entered into a legally binding Letter of Award (the “LOA”) on 16 August with Orion Engineering and Management Limited (“Orion”), for the construction of one European-designed semi-submersible drilling rig (the “Rig”). It is subsequent to the shipbuilding agreement worth over US$200 million on 14 August, with UDIN Engineering Co., Ltd., a korean offshore engineering company. According to the terms and provisions of the LOA, Orion plans to purchase the Rig for a total consideration of approximately US$320 million (excluding owner-furnished equipment), representing 24.5% of the Company’s total revenue as of 31 December 2013.
According to the LOA, the Sales and Purchase Agreement (the “Agreement”) is expected to be uted within 60 days. At the same time, Orion has the option to purchase an additional 3 rig units with the same specification of the Rig (“Option Units”) from Honghua Offshore under the same conditions each respectively at an interval of six-months. The Rig and Option Units under the LOA will be equipped with the Company’s in-house design and manufacture drilling package. Meanwhile, Orion will contract a subsidiary of Opus Offshore Ltd. (“Opus Offshore”) to supervise the construction of the Rig according to the latest regulations and highest quality standards in place within the international offshore exploration and production sector. This will enable the Company to become a world class supplier in the global offshore drilling market.
Mr. Zhang Mi, Chairman of Honghua commented, “We have always been emphasizing that Honghua must be innovative and develop its self-developed core equipment in offshore engineering sector. Signing the LOA symbolised that the Company has started a new chapter of its manufacturing business, and successfully entered into the offshore drilling equipment market. We believe that it demonstrates client and the market’s recognition on the Company’s equipment design and construction capability. Meanwhile, the construction of a series of semi-submersible drilling rigs will capitalize on the strengths of the extraordinary capability of Honghai Crane to fully achieve the innovative concept of ‘onshore manufacturing of offshore equipment’, thus reducing contruction cost and production cycle time. The Company will continue to develop the offshore engineering business, continuously deepen the global business distribution, to provide inexhaustible momentum for the sustaining and stable development of the Group’s business.”
About Honghua Group Limited (Stock Code: 196.HK)
Honghua is one of the largest land drilling equipment manufacturers in the world, which is primarily engaged in manufacturing conventional land drilling rigs, digital drilling rigs, accessories of drilling rigs, as well as the parts and components for the drilling rigs or for the maintenance of the drilling rigs in operation. Leveraging on the strong R&D strength, high-quality production facilities and mature international sales network, the Group’s products have been sold to a large number of famous enterprises all over the world, including major oil-production regions such as North America, Middle East, and emerging markets including South America, India, Russia, China, Africa. Meanwhile, the overall construction of the base located in Qidong County, Jiangsu Province progressed well, among which the dock basin project has passed the examination of related departments and the overall lifting of “Honghai crane” is expected to complete in 2015. Based on the existing solid foundation of the drilling rigs equipment, Honghua will implement diverse development strategies, and expand to become the integrated enterprise which is involved in the interaction development of three major sectors, including onshore and offshore areas, equipment manufacturing and oil and gas resources development (especially the unconventional oil and gas area), as well as engineering services.
About Honghua Offshore Oil&Gas Equipment(Jiangsu) CO.,Ltd.
Honghua offshore, is a limited liability company incorporated in the People’s Republic of China and is an indirect wholly-owned subsidiary of the Company. It is principally engaged in the manufacture business of offshore oil and gas engineering equipment.
For further information, please contact:
Honghua Group Limited
Ms. Mingjia Ding
Tel: (86 28) 8297 1864
Fax: (86 28) 8297 1850
Email: firstname.lastname@example.org / email@example.com
China's sichuan province jinniu district information garden east road no. 99