Canadian firm Precision Drilling has secured a new contract to build an ST-3000 drilling rig in Kuwait.
The take-or-pay contract is valid for five years with an option to extend it for another year.
The company already has five active rigs in Kuwait on a long-term contract, with a sixth rig expected to begin operations in the third quarter of next year.
According to the firm, all six rigs have standardised rig design features and specifications.
Precision expects the new rig to have ‘attractive’ internal return metrics and a payback period within the initial contract term.
The addition of the rig is expected to enable the company to leverage its existing scale in the country without the need for additional overheads to support the expanded fleet.
The company noted that the new rig will cost $60m, with $10m set to be spent this year and the remaining amount next year.
Precision aims to reduce debt by $75-$125m this year by generating free cash flow.
The company intends to finance this year’s capital expenditures with free cash flow.
In Canada, Precision has 54 active rigs as it emerges from the lows of spring breakup.
In a statement, Precision Drilling said: “Despite a fairly flat industry rig count, our activity levels are tracking ahead of last year with visibility to exceed 60 active rigs by mid-August, surpassing our peak rig count in the third quarter of last year.
“In the US, demand for Precision’s rigs continues to strengthen with 78 rigs currently active and visibility to reach 80 rigs by the end of July.”
