Atlantis signs Letter Of Intend with China Oilfield Services Ltd.

The offshore related company Atlantis Deepwater Technology Holding (ADTH), located in Grimstad in Norway, and China Oilfield Services Ltd. (COSL), have signed a Letter Of Intent (LOI) for use of the Atlantis deepwater technology in the upcoming China deep water exploration programs. The LOI follows the Memorandum of Understanding that was signed between the parties in August.

According to the LOI COSL has the intention to provide an undisclosed sum for work associated with upgrading of an Atlantis unit now available in Norway, in order to prepare this for applications in China. Following the upgrading work and the transportation of the unit to China, COSL will then use the unit in combination with one of their own medium water depth drilling rigs to perform deep water drilling operations. Following the successful completion of the first deep water well, COSL will then consider to either acquire the unit from ADTH or establish a rental agreement.

Following a due diligence process the LOI will be converted into a final agreement. At the time of signing the final agreement COSL also intends to invest an undisclosed sum to become a shareholder in ADTH and get exclusive rights to the Atlantis technology for the deepwater market in China and other Asia-Pacific countries. COSL will also have the option to increase their share in ADTH, by converting the investment in the upgrading work to shares in the company.

COSL is the leading provider of oilfield services in the offshore China market. Their services cover each phase of offshore oil and gas exploration, development and production. The company owns and operates offshore drilling rigs, marine support vessels, oil tankers, seismic vessels, geo-tech survey vessels and offers a comprehensive range of well services and project management solutions.

The Atlantis unit that now will be upgraded for China applications was fabricated and tested in a joint industry project in 2002 and 2003, which was funded by the Norwegian technology program “Demo 2000”, BP and Shell, and indirectly also by Statoil, who became a shareholder in ADTH in 2002.

The Atlantis technology is based on the simple principle of establishing an “artificial” seabed at 200-300 meters below the sea surface, using a submerged partly air filled steel tank which is anchored to the seabed with an extended part of the first casing string being used in the well. As opposed to the conventional method of installing all equipment at the seabed, all equipment will now be installed at a “shallow” water depth. As a consequence of this, lower rated and more easily available shallow / mid water drilling vessels can be used for deep water operations. In comparison with the cost of drilling deepwater wells with the higher rated deep water drilling vessels, ADTH estimates that significant savings can be made on each well.

ADTH is very satisfied with the fact that the first real application of the novel technology now will take place in China. Recently China has emerged as an aggressive deep water exploration province, due to the well publicized rapid growth in the economy and consequential demand for oil. China, the world’s second largest oil consumer, is now importing about one third of its total consumption and the demand for oil is projected to continue to grow rapidly. In order to improve this situation COSL and its parent company CNOOC is now actively seeking the latest technology for deepwater drilling, in order to explore China’s huge deepwater sector.

Both of the companies share the view that the successful application of this deep water technology will bring out positive outlook in the exploration and development of offshore hydrocarbon resources in deep waters.

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