The board of Sevan Marine ASA (“Sevan Marine”) will today submit an application for a listing of Sevan Drilling ASA (“Sevan Drilling”) as an independent company on the main list of the Oslo Stock Exchange. Sevan Marine has decided to organize Sevan Marine’s drilling activities into a new company to further grow and develop its ultra deep water (“UDW”) rig business.
In connection with the initial public offering (“IPO”), Sevan Drilling has entered into letters of intent (“LOIs”) for the building of two UDW rigs with options for another two. It is expected that the initial public offering towards institutional and private investors will comprise a share issue of up to USD 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.
– We are experiencing continued interest in our modern UDW rigs. 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, says Jan Erik Tveteraas, CEO of Sevan Marine.
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.
Sevan Drilling has an experienced, first class operating organisation and two UDW rigs, including Sevan Driller which operates 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 (“COSCO”) 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 USD 1.9 billion as per year end 2010.
Letters of intent for the construction of two new UDW rigs
On 24 March 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 USD 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.
The net proceeds from the share issue will be used to finance the 20% equity portion of two newbuild rigs and general corporate purposes in Sevan Drilling.
– The Board of Sevan Marine believes that the best way of exploiting the full potential of Sevan Drilling is through an independent company. The listing will provide direct access for the drilling business to the equity markets and investors will have the opportunity to obtain direct exposure to a pure play UDW drilling contractor. Focusing the FPSO and drilling businesses is expected to contribute to profitable growth for both Sevan Marine and Sevan Drilling. I am pleased that Mr. Jan Erik Tveteraas and Mr. Jon Willmann have accepted the positions as CEO and CFO of Sevan Drilling. They will be instrumental in growing Sevan Drilling as an independent company as well as ensuring continuity for the organization and its clients, says Arne Smedal, Chairman of Sevan Marine.
Source: Sevan Marine , March 25, 2011; Image:China-Pile