Two more seismic ships for Eastern Echo - construction to take place in DubaiVessel & ROV News // October 1, 2007
Eastern Echo is to build two SX 121 seismic ships in Dubai.
Eastern Echo has negotiated a Letter of Intent to build two more X BOW seismic vessels for delivery in the first quarter and second quarter of 2009. The vessels will be built in the Middle East at Dubai Drydocks.
The company has also decided to upgrade vessels 1-4 in the series from 10 to 12 streamer capacity in order to increase operational efficiency.
In addition, the board of directors has resolved to file an application for listing on the Oslo Axess.
"‘Eastern Echo is pleased to announce that the company has negotiated a LOI for vessels five and six. The delivery date will be as early as 17 months from signing the LOI. This is more than 1.5 years earlier than the original shipbuilding options and will have a significant financial impact. The accelerated delivery time is expected to generate some US$120 million in profit for the period," said the company's CEO, Rolf Rønningen.
"We are quite excited to be able to build the vessels at Dubai Drydocks. Firstly, being a company with a main office in Dubai the management is given easy access to follow the building process closely. Secondly, we get a good exposure to the Eastern hemisphere," Rønningen said.
The estimated project cost for the newbuilds is US$130 million per vessel including 12 streamer capacity, compared with US$117 million dollars per upgraded vessel 1-4.
Options for long lead time items had previously been secured by the company. The project cost for vessels five and six will be financed through a sale leaseback financing with a callable 10 year bareboat agreement and an equity injection of US$10 million. The bareboat rate is set to a competitive rate.
The estimated payback time for the investment in additional streamer capacity will be less than two years. The upgrade will have a maximum impact of two weeks on delivery time for the first two vessels and no impact on vessels three and four.
In connection with the decision to upgrade, Eastern Echo has undertaken a thorough and comprehensive review of the project. This has lead to a revised project cost of US$117 million per vessel, compared with originally estimated project cost of US$100.5 million.
The upgraded streamer capacity represents an increased investment cost of US$5 million. The balance represents US$3 million in currency loss and US$3 million in increased installation and transportation cost in addition to US$6 million in increased contingency.
All of Eastern Echo's newbuilds are based on the SX 124 X-BOW design from Ulstein Design in Norway.