Offshore driller Pride International said South Korea's Samsung Heavy Industries will build its fifth ultra-deepwater rig at about $600 million, signaling a gradual recovery of the deepwater market.

The agreement also includes an option for a second rig at similar terms and conditions, which could be exercised during the first quarter of 2011.

The rig, which is likely to be delivered in mid-2013, is designed for drilling in water depths of up to 12,000 feet, Pride International said in a statement.

The Houston-based firm expects to fund the construction of the rig with available cash, cash flow from operations, and borrowings under its available credit facility, if required.

"The long-term outlook for the deepwater drilling sector is expected to remain fundamentally strong," Pride Chief Executive Louis Raspino said.

Pride International's shares, cited as a takeover target, have risen by about a quarter in the last three months. They closed at $32.54 on Monday on the New York Stock Exchange.