ARO Drilling, a 50:50 joint venture (JV) between offshore drilling contractor Valaris and state-owned oil firm Saudi Aramco, has ordered two newbuild jackup rigs.

The JV has placed the order with International Maritime Industries (IMI).

According to Valaris, each new build will cost approximately $175m. They will constructed to the specifications laid out by Saudi Aramco.

Valaris said: “Upon delivery, each rig is expected to commence an eight-year contract with Saudi Aramco and operate at a day rate determined by a six-year EBITDA payback.”

Post the initial eight-year contract and pending certain conditions, each rig will secure another eight-year contract.

The JV will reprice the daily operating rate for each jack-up every three years. Thereafter the rigs will require new Saudi Aramco contracts.

This will be based on meeting certain conditions and will come into effect after the initial contract period.

Valaris said that ARO will pay 25% of the cost as an initial down payment. It will do this using cash on hand and the remaining 75% upon final delivery of each rig.

The JV expects to receive the first newbuild rig in the first quarter of 2022 and the second in the second quarter of 2022.

In November, Valaris secured new contracts and extensions for its drilling rigs, with an associated revenue backlog of about $285m.

In August 2018, ARO Drilling secured six three-year Saudi Arabian drilling contracts for Rowan jack-up rigs.

Headquartered in the UK, Valaris provides offshore drilling services across all water depths and geographies. It operates a fleet of ultra-deepwater drillships, semisubmersibles and advanced shallow-water jackups.