UPDATE 1-Transocean to buy deepwater drillship

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NEW YORK, June 23 (Reuters) - Transocean Inc (RIG.N) on Monday said it agreed to buy an ultra-deepwater drillship from Petrobras (PETR4.SA) and Mitsui (8031.T) under a 20-year capital lease contract.

The company did not disclose what it is paying for the capital lease contract, but a spokesman said the rate of return would be comparable to other newly-built ships it has acquired.

Along with the lease contract, Petrobras and Transocean have entered into a 10-year drilling contract for the rig covering worldwide operations, with an option by Petrobras to extend the term of the drilling contract for up to 10 years.

Transocean said it expects revenue from the initial 10-year contract to be $1.68 billion.

The currently unnamed drillship is being built in Geoje, South Korea, for about $750 million. The 10-year drilling contract is expected to begin in the third quarter of 2009 after construction and sea trials take place.

At the end of the 20-year capital lease term, the company will acquire the drillship for $1, Transocean said.

Shares of Transocean closed up $5.85, or 3.9 percent, to $154.66 in New York Stock Exchange trading on Monday. (Reporting by Michael Erman, editing by Phil Berlowitz)