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Completion of the Acquisition of Two Jack-Up Rigs

Source: www.gulfoilandgas.com 5/9/2019, Location: Asia

Reference is made to the announcement by Shelf Drilling, Ltd. ("Shelf Drilling" or the "Company", OSE ticker code "SHLF", and together with its direct and indirect subsidiaries the "Group") on 21 February 2019 regarding the entering into of agreements with affiliates of China Merchants & Great Wall Ocean Strategy & Technology Fund ("CM" or “China Merchants”) for the (i) contemplated acquisition of two jack-up rigs, (ii) issuance of new common shares and (iii) bareboat charter agreements for two additional jack-up rigs (the "Transaction").

The Transaction was completed today, on 9 May 2019.

David Mullen, Chief Executive Officer said: “The closing of this transaction marks an important milestone for Shelf Drilling and we would like to congratulate everyone involved in this process. The on-time delivery of the two premium CJ-46 jack-ups is the result of a truly collaborative effort between Shelf Drilling and China Merchants. Our alliance with China Merchants significantly strengthens our competitive position and creates tangible value for all our stakeholders. It also provides us access to the experience and resources of one of the largest state-owned enterprises in China and we look forward to welcoming their representatives to our Board. The addition of these four premium jack-up rigs creates exciting near-term opportunities for Shelf Drilling in an improving jack-up market.”

In connection with the completion of the Transaction, 26,769,230 new common shares, each with a par value of USD 0.01, (the "New Common Shares") have been issued to Wealthy Marvel International Limited (an affiliate of CM) and Wealthy Marvel Enterprises Limited (a joint venture between CM and CMIC Ocean En-Tech Holding Co., Ltd. (formerly known as TSC Group Holdings Limited)), at a subscription price per share of USD 6.50. The subscription amount will be used to settle the purchase price for the two premium CJ46 jack-up rigs acquired by, and delivered to, the Group.

The New Common Shares have today been legally and validly issued and will be registered in the VPS in the form of depository receipts/securities (the "Securities"). A prospectus for the listing of the Securities on the Oslo Stock Exchange has been approved by the Financial Supervisory Authority of Norway on 7 May 2019 and will be publicly available today on the following website: https://www.shelfdrilling.com/. Hard copies of the prospectus are available at the offices of Advokatfirmaet Thommessen AS at Haakon VIIs gate 10, 0161 Oslo, Norway.

Following the issuance of the New Common Shares, the share capital of the Company is USD 1,380,096.24 consisting of 138,009,624 common shares, each with a par value of USD 0.01. Further, the issuance of the New Common Shares resulted in a dilution of existing security holders. Consequently, the shareholding of each of (i) funds affiliated with, managed or advised by CHAMP III Management Pty Ltd., (ii) funds affiliated with Castle Harlan, Inc. and (iii) a fund affiliated with Lime Rock Management LP (together the "Sponsors") fell below 14% of the issued and outstanding common shares of the Company. According to the Company's articles of association, the number of directors to be appointed by each of the Sponsors will, as of today, be reduced by one, so that each of the Sponsors is entitled to appoint only one individual as a member of the board of directors.

As such, the following individuals will, as of today, no longer be members of the board of directors of the Company: David Pittaway, John Reynolds and Tyson Smith. The Sponsors and CM have, however, agreed to, at the next general meeting of the Company, vote in favour of the re-appointment of these three directors plus appointment of two new directors nominated by CM.

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