India's state-run, Oil and Natural Gas Corp Ltd (ONGC) has awarded a contract worth $185 million or around Rs. 1,050 crore to Aban Offshore Ltd.

The contract will involve the private oil drilling contractor deploying drillship Aban Ice for a period of three years. The deployment of drillship Aban Ice is expected to begin in the October-December period. The company already has 20 offshore drilling and production units at various locations.

Aban Offshore, which is one of the leading offshore drilling contractors, said on Friday that it has received the Letter of Award (LOA) from ONGC for the contract.

Experts said that even as the rig rates remain low and are expected to remain stable, the company might be able to tackle its high debt level with higher utilization and improve its financial standing. The company has faced low renewals due to declining charter rates and interest costs. The company has a debt of Rs 11,865 crore that is about six times its operating profit. The company exhausts about 60 per cent of its operating profit in servicing interest cost.

Shares of the company rose 2.29 per cent to Rs. 304.00 on the Bombay stock Exchange (BSE) today.