Private equity aids Shelf Drilling in jack-up trio buy

Private equity investment firm Castle Harlan and its partners, Champ Private Equity and Lime Rock Partners, have supported Shelf Drilling in a recent acquisition of three premium jack-up rigs, and the investors are eager to support further fleet expansion if the price is right.

The acquisition of the rigs in the Middle East has been described as a continuation of Shelf Drilling’s strategy of solely focusing on shallow water drilling, and further expands the company’s presence in one of its key operating regions.

Offshore Energy Today reported in early May that Shelf Drilling had agreed the purchase the three rigs from Seadrill. Castle Harlan said on Tuesday that the purchase and delivery of two of the three rigs, the West Resolute and the West Triton, was completed during the same month.

The two former Seadrill rigs have been renamed Shelf Drilling Resourceful and Shelf Drilling Tenacious, respectively. The third jack-up rig, the West Mischief, is expected to be delivered to Shelf during the third quarter of 2017 upon completion of its current contract.

Following the purchase and delivery of all three rigs, Shelf Drilling’s fleet will increase from 37 to 40.

Shelf Drilling financed the purchase through a $225 million equity issuance listed on the Norwegian OTC list and began trading under the ticker “SHLF” as of May 5, 2017.

David Pittaway, senior managing director of Castle Harlan, said: “We are continuing to enhance the value of the company and its offerings to customers, and we will add rigs to Shelf Drilling’s fleet when the price is attractive. These three rigs are especially suitable because they have a strong operating track record in the region and can reach deep into the sea floor where significant oil and gas deposits are found.”

Eric Schwartz, managing director of Castle Harlan, added that current market conditions provided an opportunistic time for buying shallow water jack-up rigs, and in this case allowed Shelf Drilling to purchase these three rigs at a significant discount to both replacement cost and historical valuations.

Interestingly, the same investment firm trio sponsored a major rig acquisition by Shelf Drilling back in 2012. Namely, the company acquired its first 37 jack-up drilling rigs as well as one swamp barge from Transocean.

Offshore Energy Today Staff

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