SeaDragon, the London-based exploration rig builder, has appointed ABN Amro to consider its options as it mulls a possible Initial Public Offering that could value the company at up to $1bn (£500m). Seadragon, which was only formed last year, will also begin construction of the largest rig to be built in the UK for 21 years, as part of a $958m contract with Pemex, Mexico's state-run oil group.

The semi-submersible rig will be the first of three to be built at Teesside's Haverton Hill Yard and SeaDragon expects the project, slated to begin in October, to create up to 600 new jobs. Engineers at Haverton Hill will build the topside of the rigs, while the hulls are constructed at the Vyborg and Sevmash shipyards in Russia.

Haverton Hill has suffered from the decline of the British shipbuilding industry as contracts have been awarded to builders in the Far East. The deal is the first major step in the regeneration of the dockyards. Such is the demand for oil rigs that most major building yards are at capacity, with little scope for new orders until beyond 2010.

Commenting on the deal, SeaDragon's chairman, Steve Baird, said: "This is a good start for SeaDragon and its existing shareholders and, with two more charters to obtain, it is an excellent opportunity for us to share in the growth of SeaDragon by embarking on one of the more significant oil-rig equity placements of the year."

According to sources close to SeaDragon, the deal with Pemex is something of a coup. Pemex is Mexico's largest corporation, the world's ninth largest integrated oil and gas group and the world's third largest producer of crude oil.