TITAN Energy Services (TTN) has formalised a second long-term drilling agreement with Australia Pacific LNG.
The agreement, which was foreshadowed in a market announcement on November 6, will see Titan’s Atlas Drilling division operate and supply a Surface Casing Rig Package (Atlas Rig 4) to Australia Pacific LNG, Australia’s largest CSG producer.
As announced on November 26, Atlas and Australia Pacific LNG have also signed a separate six- month contract, with a six-month option, in relation to Atlas’s Rig 3, a SchrammTXD rig.
Titan managing director Jim Sturgess said the Rig 4 agreement is for a one year contract, with an additional one year option (1+1). He said the rig, which would become Atlas’s fourth, was expected to generate $5.5million in revenue over the initial term including non recurring mobilisation revenue.
Total rig package capital expenditure is expected to be approximately $4.0m and will be funded via a combination of debt and operating cashflow.
“This new agreement expands the Atlas business and, at the same time, highlights Titan’s ability to deliver key business solutions to its partners in Queensland’s coal seam gas (CSG) industry,” Mr Sturgess said.
“Two of our four drilling rigs are now with Australia Pacific LNG in addition to the agreement in place with QGC and Arrow Energy.
“Together, this means we are well placed with strong working relationships in this expanding sector and we are committed to enhancing these relationships and building on our early successes as the industry develops into the future.”
Titan expects Atlas Rig 4 to be fully operational in March 2013, subject to weather conditions and assuming no delays are encountered during the shipping process.
Mr Sturgess said the agreements with Australia Pacific LNG had been factored into the recent profit upgrade Titan delivered at its Annual General Meeting in Brisbane. At that meeting, Mr Sturgess told shareholders the company would target an EBIT result between $8million and $9million during 2012/13, compared to $3.9million during 2011/12.
Titan’s initial target for 2012/13 was for an EBIT result between $7million and $8million.
The Australia Pacific LNG project includes the development of Australia’s largest 2P CSG resources in the Surat and Bowen basins, a 530km transmission pipeline and an LNG facility off the coast of Gladstone, Queensland.
[mappress] LNG World News Staff, January 14, 2013; Image: APLNG