Seadrill has received a letter of intent from Statoil to buy a jack-up drilling rig for $650m to be used in the Norwegian Continental Shelf.

The proposed five-year contract, with the option to extend from one to four years, is scheduled to begin in the third quarter of 2011.

Currently, the jack-up rig of Gusto MSC CJ70 150A design is under construction at Jurong Shipyard in Singapore with completion expected in the first quarter of 2011.

The drilling unit, which Seadrill will buy from Jurong Shipyard for around $350m, does not include owner-furnished equipment, loose drilling equipment, capitalised interest and project management.

The rig, which has a high specification drilling unit, can operate at water depths of up to 150m, the company said.