The LOI anticipates that XER and BAOL will enter into a definitive agreement for the rig by 15 December 2010, following which the Rowan Norway is expected to be available to begin the first stage production (FSP) on the Bentley field in the fourth quarter of 2011.
The LOI provides for a termination fee of $2.5m payable by XER in the event it does not enter into the agreement by this date.
The initial commitment period of 240 days will facilitate the drilling of up to six wells on the Bentley field as part of the anticipated three year FSP.
At the time of signing the agreement, XER will be required to demonstrate financial capability for the first 120 days of the contract commitment in the amount of $30m.
In addition, XER will be required to demonstrate financial capability for the second 120 days of the contract commitment in the amount of $30m by 31 January 2011.
XER may reduce the initial commitment period to 120 days, in which event it will be required to demonstrate additional financial capability of $3.6m for this 120 day period.
