Seadrill and North Atlantic Drilling Announce Strategic Partnership

By MarEx 2013-08-15 10:25:00

North Atlantic Drilling Ltd. ("NADL" or the "Company") and Seadrill Limited ("Seadrill") announced in their first quarter 2013 reports that the companies were actively engaged in discussions with potential strategic partners in order to strengthen NADL's position in harsh environment areas. 

The basis for the establishment of NADL in 2011 was to carve out a premium specialist operator with a superior safety standard in harsh environment areas and to use this as a platform to grow the business substantially. NADL builds on a 40-year history of drilling operations and a best-in-class track record in challenging areas. The recent discoveries and activities in harsh environment areas like Norway, Northern part of the UK, North Canada and Alaska, Greenland, Arctic and Northern and Far East part of Russia strongly confirm this growth opportunity. The supply and demand balance for these markets looks tight considering that very few suitable new units are to be delivered in the next years. It is likely that this new capacity is insufficient to meet what is expected to be a very high growth in demand for drilling activities.

The boards of Seadrill and NADL have in this respect focused on further strengthening  the foothold for future operations in new offshore frontiers, including the emerging Arctic and sub-Arctic harsh environment areas in the Northern hemisphere.  Particular focus has been placed on pursuing business in the promising Russian offshore sector.

NADL and Seadrill are pleased to announce that a preliminary agreement to create a strategic partnership with a strong industrial player has been reached to foster growth of the company's harsh environment business. The potential strategic partner has a strong foothold in the Russian market, vast experience and competence in Arctic operations, including unique expertise in ice management. The partnership brings together organisations with complimentary skillsets well positioned to capture growth, building on their respective experience and know-how and creating new industrial synergies. 

The potential strategic partner will initially purchase a substantial minority stake in NADL from Seadrill priced around current market levels. Further the partner will be granted an option to acquire a majority stake at a later stage at a premium to the current market levels. Signing and closing of the transaction is expected within the third quarter of 2013. Both Seadrill and the potential strategic partner strongly support an immediate US-listing of NADL post closing of the first part of the transaction.

The Company's operations in Stavanger will continue as today and will focus on the current operations and future growth. The strategic partnership is likely to entail opening up of other regional offices to serve local growth in demand. Overall activity level is expected to increase and provide employees with attractive opportunities. 

Seadrill is fully committed to remaining a long term shareholder and partner in NADL. The board is confident that the agreed partnership structure will strengthen NADL as the leading pure play harsh environment drilling company and position it uniquely to increase the value for all of the Company's shareholders and make it an even more attractive workplace for the employees.

It is Seadrill's intention that parts of the proceeds it will receive from the first phase of the transaction will be used to purchase shares in the open market in order to re-increase its ownership in NADL. The remaining proceeds will be used to fund existing and new growth opportunities within Seadrill's global ultra-deepwater and premium jack-up businesses and might also be used to support Seadrill's share of further growth in NADL. 

Seadrill has since January 1, 2013 committed approximately US$5 billion in acquisitions and newbuild orders. Based on these investments Seadrill expects high growth in earnings and dividend capacity in the years to come. The Boards of Seadrill and NADL will continue to look for further strategic opportunities with a target to better position our companies for future business. 

NADL is an offshore harsh environment drilling company with focus on the North Atlantic basin. The company has nine drilling units in the fleet, including five semi-submersible, a drillship, and three jack-up rigs. Seadrill Limited currently owns 74% of the outstanding shares and the company is listed on the Norwegian OTC exchange with a market capitalization of approximately US$2.3 billion.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

The products and services herein described in this press release are not endorsed by The Maritime Executive.