Statement re Monthly Shareholder Fact Sheet
CQS RIG FINANCE FUND LIMITED
Monthly Shareholder Fact Sheet
CQS Rig Finance Fund Limited (the "Company"), a closed-ended investment company incorporated in Guernsey, is pleased to announce that its Monthly Fact Sheet for January 2012 is now available on the Company's website (www.cqsrigfinance.com) and includes further information on the top ten investments and outstanding borrowings.
Risky assets started the New Year as they had ended the old one, on a very firm footing. The rally that had started in mid-December continued and intensified throughout the month as the market digested the implications of the European Central Bank Long Term Refinancing Operation (LTRO) and hoped for a debt restructuring agreement between Greece and private bondholders. The announcement by US Federal Reserve officials that they expect to keep interest rates low through to the end of 2014 fuelled the rally towards the end of the month. The S&P 500 Index and the Merrill Lynch High Yield Index (ex financial) closed up 4.4% and 5.5% on the month respectively. The price of Brent Crude followed a similar trend closing up almost 4% at over $110 per barrel. The Company's NAV per share rose 1.3% during the month from 32.83p to 33.26p with a number of positions being marked up in line with the wider markets.
There was a new deal in the month from Welltec A/S which develops and provides well technology and solutions for the oil and gas industry. Welltec brought a $325m 1st lien senior secured 2019 callable bond. The bond pays a fixed coupon of 8% semi-annually and was issued at a discount to yield 8.5% to maturity or 10.85% to the first call date in 2015. The bond is officially rated BB- by Standard and Poor's. The Company subscribed for and was allocated an amount of the new deal.
There was more encouraging contract news during the month.
Ocean Rig UDW Inc. announced that it had signed a new drilling contract for its semi-submersible drilling rig "Eirik Raude" with an independent operator for work offshore West Africa. The company's website states the maximum total revenue backlog to complete the 3 well program is estimated at $52m for a period of 60 days. The new contract will commence in direct continuation after the completion of the existing Eirik Raude contract. The operator has an option to drill one additional well for an estimated duration of 20 days.
In the first week of February, Ocean Rig UDW Inc further announced it had signed a new drilling contract for its semi-submersible drilling rig "Leiv Eiriksson " with a consortium coordinated by Rig Management Norway for drilling on the Norwegian Continental Shelf. The maximum total revenue backlog is estimated at $653m for a minimum period of 1070 days ($610k per day). The new contract is a well-based contract for 15 wells and will commence in the fourth quarter of 2012 or the first quarter of 2013. The contract includes three options of six wells each that have to be exercised well in advance of the expiry of the firm period.
George Economou, Chairman and Chief Executive Officer of Ocean Rig UDW Inc commented "We are pleased to announce this long-term contract with a strong consortium for work on the Norwegian Continental Shelf, taking advantage of the Leiv Eiriksson's harsh weather capabilities. This contract substantially enhances our backlog and is evidence of the strengthening market for high specification ultra-deepwater rigs. We have two further high specification ultra-deepwater capable units open in 2012, the Eirik Raude and Ocean Rig Olympia, and we are focused on securing long-term contracts for them." The Company owns Ocean Rig Bonds which were marked up seven points in the month.
In addition, ultra-deepwater semi submersible drilling rig "Noble Jim Day" owned by Noble Corporation won a three-year contract at a $530,000 day rate from Shell for operations in the US Gulf. Market analysts stated that this is a solid day-rate confirming a continued strong market. For 2012, only 13 ultra-deepwater rigs are now available (source FondsFinans).
Finally, North Atlantic Drilling Ltd. (NADL) was awarded an 18-month contract extension for the drillship West Navigator by Norske Shell. This contract extension will secure employment for West Navigator until end of June 2014. The estimated revenue value for the contract extension is $320m or a daily rate of $587k. The contract underlines the strength in the drilling market and the market on the Norwegian Continental Shelf in particular (source Pareto). The Company has positions in Seadrill Limited which owns 75% of NADL.
For further information, please contact:
Kleinwort Benson (Channel Islands) Fund Services Limited
01481 710 607
Alastair Moreton/Hannah Young
NOMAD and Broker
Westhouse Securities Limited
020 7601 6118
All market data sourced from Bloomberg unless otherwise stated.
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Source: CQS Rig Finance Fund Ltd via Thomson Reuters ONE