Sevan focuses on ultra-deepwater, orders two new rigs from COSCO for $1.5B

Source: Sevan Marine

In an effort to organize Sevan Marine’s drilling activities into a new company to further grow and develop its ultra-deepwater rig business, Sevan Marine is submitting an application for a listing of Sevan Drilling ASA as an independent company on the main list of the Oslo Stock Exchange. 

In connection with the initial public offering (IPO), Sevan Drilling has entered into letters of intent (LOIs) for the building of two ultra-deepwater drilling rigs, with options for another two. 

Newbuild Contracts

On March 24, 2011, subsidiaries of Sevan Drilling entered into LOIs with COSCO for the construction of two UDW drilling rigs based on the same design as Sevan Driller and Sevan Brasil. 

The rigs are to be delivered in the fourth quarter of 2013 and second quarter of 2014. The LOIs are for turn-key construction contracts with an estimated all-in price of US $525 million per rig. The payment structure is 20% payable upon signing of final construction contracts and 80% payable upon delivery. The LOIs provide for options to build two additional UDW drilling rigs at the same terms with the exception of certain currency and inflation adjustments. Signing of the final construction contracts with COSCO is subject to listing of Sevan Drilling. 

“We are experiencing continued interest in our modern ultra-deepwater rigs.,” said Jan Erik Tveteraas, CEO of Sevan Marine. “We see a healthy and increasing demand for such rigs going forward. We believe that a separate listing will increase the visibility of the underlying values of the business to the benefit of our shareholders. Independence will act as a catalyst for further growth for both the FPSO and the drilling business.” 

Current Fleet

Sevan Drilling has an experienced, first class operating organisation and two ultra-deepwater rigs, including Sevan Driller, which is operating for Petrobras under a 6-year fixed term charter that commenced in June 2010; and Sevan Brasil, which is under construction and is expected to be delivered from the COSCO Shipyard in China during the first quarter of 2012, and will commence drilling activities under a 6-year fixed term charter with Petrobras during the second quarter of 2012. The estimated revenue back log from these long term charter contracts was approximately US $1.9 billion as per year end 2010. 

It is expected that the initial public offering towards institutional and private investors will comprise a share issue of up to US $350 million and a secondary sale of shares by Sevan Marine, with the aim of Sevan Marine holding approx. 20% of the shares post IPO. The initial public offering is expected to commence in April. 

Sevan Drilling Management 

Mr. Jan Erik Tveteraas, the current CEO Sevan Marine, will assume the position as CEO of Sevan Drilling as from the first day of listing and Mr. Jon Willmann, Senior Vice President Drilling Sevan Marine, will assume the position of CFO. Jan Erik Tveteraas will be proposed to the nomination committee as a board member of Sevan Marine. Sevan Marine is in the process of selecting a successor for Mr. Tveteraas.
Furthermore, Mr. Jon C. Cole will assume the position as Chairman of Sevan Drilling. Mr. Cole was founder of Scorpion Offshore Ltd. and served as its President and Chief Executive Officer from 2005 to 2010. Mr. Cole has spent his entire career, spanning nearly three decades, in the contract drilling industry, including senior positions with Transocean and Ensco.

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