Rowan Companies plc RDC declared that it has entered into an accord with Saudi Arabian Oil Company ("Saudi Aramco") for creating a new offshore drilling entity.
The joint venture – where both the firms are expected to have 50% ownership – will likely own, and operate offshore drilling units in Saudi Arabia. The new entity, expected to start operations by the second quarter of 2017, will probably utilize the established businesses of Rowan in Saudi Arabia and its operations will span existing and future offshore oil and gas fields in the desert country.
Investors should know that Rowan has decided to contribute three jack-ups when the new entity starts operations. Rowan will also provide two additional jack-up rigs during late 2018. Saudi Aramco, on the other hand, is anticipated to provide two jack-up drilling rigs. Moreover, the joint venture is expected to manage five jack-ups of Rowan working presently in Saudi Arabia.
Both Rowan and Saudi Aramco have longstanding ties and this alliance will strengthen their partnership further. Following their venture, the new firm will be able to participate in the growing offshore drilling market of Saudi Arabia. Rowan added that it will create relationships with leading oil and gas exploration and production players in the region through long-term rig commitments.
Houston, TX-based Rowan provides international and domestic contract drilling and aviation services. Presently, the company carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.
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