Contemplated Share Issue in New Subsidiary

Source: www.gulfoilandgas.com 2/15/2011, Location: North America

The Board of Directors of Seadrill Limited ("Seadrill") have decided to create a new drilling company focusing entirely on harsh environment operations. To achieve that Seadrill will spin off its operations in the North Atlantic Basin into a new subsidiary, the North Atlantic Drilling Limited ("NADL" or the "Company"), by transferring a fleet of six existing harsh environment units to NADL. The fleet will consist of the following drilling units: West Phoenix, West Venture, West Alpha, West Navigator, West Epsilon and West Elara. In addition, Seadrill is in final stages of negotiating a new building contract for a 7th unit, which will also become a part of NADL.

The objective is to develop an unrivalled owner and operator of arctic and harsh environment drilling units. NADL will have some 1,000 employees working in an organization which have nearly 40 years of experience. This will put the Company in a unique position to serve the oil companies safely and effectively in developing new and even more challenging reservoirs.

The Board of Director has aggressive ambitions for growth in this segment. Although a part of this growth will be organic, the Company will with a contract backlog of more than US$3 billion and a solid balance sheet be well positioned to play a leading role in consolidation of this fragmented market segment.

The Company will target a minimum annual dividend yield of 7% for its shareholders.

Seadrill has retained the services of RS Platou Markets AS, ABG Sundal Collier Norge ASA, Carnegie ASA, and Fearnleys Fonds ASA to effect a private placement of new shares directed towards Norwegian and international institutional investors (the "Private Placement").

The anticipated gross proceeds of the contemplated Private Placement will be US$1,700 million through issuance of 1,000,000,000 new ordinary shares. The order price has been set at US$1.7 per share by the Board of Directors. Seadrill will subscribe for and be allocated a minimum of 750,000,000 shares, and will following the private Placement own approximately 75% of the new Company. The remaining 25% will be owned by new shareholders. The minimum order in the Private Placement has been set to US$250,000.

The gross proceeds of the Private Placement will be used to finance the acquisition of the six drilling units from Seadrill mentioned above and to fund necessary working capital.

The application period commences today (February 15, 2011) at 09:00 CET and close on February 16, 2011 at 22:00 CET. The Board of Directors of NADL may, however, at any time resolve to close early or extend the application period at its own discretion. However, the Application period will under no circumstances close prior to 12:00 (CET) on 16 February 2011.

Alf C Thorkildsen, CEO of Seadrill Management AS says in a comment, "We are excited about the establishment of North Atlantic Drilling. We have six units on long term contracts and a unique position in the harsh environment market segment. Through the establishment

of the new Company, we can capitalise on this position and seek growth and consolidation opportunities which are limited by the existing ownership structure. Seadrill will remain a long term majority shareholder in North Atlantic Drilling.

The proceeds we receive from this Private Placement will further enable the growth in Seadrill's three core global markets, i.e. the ultra-deepwater market, the high-end jack-up market, and the tender rig market. The proceeds from the Private Placement will together with our strong cash flow make it possible for us to conclude ongoing evaluation of fleet expansion without raising additional equity.

Our recent spin off of Seawell, has proven the value such a transaction can generate to both Seadrill and other participating investors. We foresee a similar outcome with NADL driven by creation of a market leading harsh environment player, and a stronger Seadrill with increased earnings capacity".

The Board of NADL has resolved to apply for listing on the Oslo Stock Exchange within 2011. The shares will commence trading on the Norwegian over the counter ("N-OTC") following delivery of the shares to the investors. The Private Placement is subject to the approval by the Board of NADL following closure of the placement.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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