Seadrill spins off harsh-environment rig fleet into North Atlantic Drilling

Source: Seadrill

Seadrill (NYSE:SDRL) reported that North Atlantic Drilling's acquisition of its harsh-environment drilling activities was successfully completed on March 31, 2011. Closing of the transaction took place in line with the initial agreement after North Atlantic Drilling successfully completed a private placement of 250,000,000 new shares in February and secured a US$2.0 billion loan facility.

"We are pleased to have secured the necessary financing for North Atlantic Drilling and completed the acquisition agreement in line with an ambitious schedule," said Alf Thorkildsen, ECO of Seadrill Management. This marks an important starting point for North Atlantic Drilling which will now commence operations with its rigs. We look forward to develop North Atlantic Drilling further and believe the company is well positioned to take active leadership in a further consolidation of the fast growing market for harsh-environment drilling units." 

All 1,050 employees involved in the operations of the five existing operating units have accepted to be transferred from Seadrill to North Atlantic Drilling. 

Harsh-Environment Rig Fleet

North Atlantic Drilling will, effective from April 1, have five drilling units in operation. North Atlantic Drilling's sixth rig, the West Elara, is expected to be delivered from the Jurong Shipyard during the second quarter 2011 and will then commence drilling operations under a contract with Statoil in the North Sea. 

Seadrill has furthermore decided to offer the recently ordered harsh environment jack-up drilling rig West Linus, which will be delivered in 2013, to North Atlantic Drilling at its cost. The unit has a five year drilling contract in place for operations in Norway for ConocoPhillips. It is anticipated that the acquisition of West Linus including the contract coverage can be completed without raising additional equity.

Financials

The US$4.1 billion purchase price to Seadrill was settled by North Atlantic assuming approximately US$2.0 billion in existing debt and payment obligations. This will be refinanced by drawing down the loan facility mid April. The loan facility will have a six-year tenor with a balloon installment of US$1.0 billion at maturity. The loan will have a cost of Libor plus 2.0% margin, which is lower than anticipated in the original presentation.

Furthermore, North Atlantic Drilling has issued a US$500 million seven-year bond loan with a coupon of 7.75%, subscribed for in full by Seadrill as part of the settlement. Seadrill intends to resell the bond in the market.

The remaining part of the purchase price has been paid in cash and shares.

As a consequence of the closing, the right for North Atlantic Drilling's shareholders to put their North Atlantic Drilling shares to Seadrill at the original issue price of US$1.70 per share will expire at close of business Oslo time on April 14, 2011, i.e. 10 working days after closing of the Acquisition Agreement.

North Atlantic Drilling has issued 750 million new shares to Seadrill at a subscription price of US$1.70. North Atlantic Drilling has after the transaction 1.0 billion shares issued of which Seadrill holds 75%. The company has currently 1,190 shareholders. Of which 391 are employees in North Atlantic Drilling.

The Board of North Atlantic Drilling has subsequent to the successful completion of the acquisition agreement decided to proceed with a listing of the company's shares on the Oslo Stock Exchange. The aim is to complete the listing in the third quarter 2011.



Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Leveraging the Power of Information in the Energy Industry

Information Governance is about more than compliance. It’s about using your information to drive ...

Reduce Engineering Project Complexity

Engineering document management presents unique and complex challenges. A solution based in Enter...

Revolutionizing Asset Management in the Electric Power Industry

With the arrival of the Industrial Internet of Things, data is growing and becoming more accessib...

Latest PennEnergy Jobs

PennEnergy Oil & Gas Jobs