OSLO (Bloomberg) — Bermuda-based Scorpion Offshore Ltd., an owner of oil rigs, said its needs $114 million and may sell debt and new shares, as well as its Offshore Mischief rig.

The company needs $40 million for the start-up of the Offshore Intrepid and Offshore Freedom charter contracts and $74 million to complete construction of Offshore Mischief, the company said in a statement distributed by the Oslo stock exchange on Friday. Scorpion is scheduled to make payments on November 1, the company said.

"The funds will be raised in the form of bank debt and equity, if necessary, in addition to excess cash flow from operations, although no decision has been made as to the exact amounts of each element," the company said. "Such A decision will be made by the company's board of directors, taking into account the prevailing financial market conditions."

Demand for oil and gas rigs has slipped after crude prices declined by almost 60 percent since a record in July, prompting oil companies to reduce exploration spending. The number of rigs operating in the US fell to the lowest level in six years this month, Baker Hughes Inc. said on May 15.

"The current market downturn may result in many existing older rigs not returning to the competitive fleet in the future," Scorpion said. "Capacity additions coupled with weakening demand have resulted in lower rig utilisation and day rates."