Parker Drilling ends Saudi Riyadh venture as losses mount

09 April 2008
Houston-based Parker Drilling Company has ended its troubled joint venture with the local Abdullah Rasheed al-Rushaid Company after incurring a $1.5m loss in a contract with client Saudi Aramco.

Parker is to sell its 50 per cent stake in the Al-Rushaid Parker Drilling consortium to an affiliate of the Abdullah Rasheed al-Rushaid Company, which currently owns the remaining 50 per cent interest.

The joint venture has previously encountered delays delivering six new rigs and has entered into talks over compensation with Aramco.

Much of the costs for the joint venture stem from its decision to rent rigs from third parties due to the delay in receiving contracted equipment, which led to an estimated $20m operating loss for the joint venture in 2007 (MEED 18:3:08).

A further $28m may yet be lost by the joint venture, after being set aside as a one-off charge which is still under negotiation with Aramco.

The joint venture obtained asset-based financing to fund a large portion of the acquisition cost of new land rigs with the balance, estimated at about $20m, being funded by cash contributions from both partners (MEED 8:9:06).

Parker Drilling’s shares increased by 2.6 per cent in early trading on the New York Stock Exchange on 9 April to trade at $7.16.

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