Rosneft, NADL mull assets swap

Rosneft, Seadrill Limited and North Atlantic Drilling Limited (NADL) signed a Framework Agreement that envisages long-term cooperation in the sphere of oilfield development projects.

The document foresees the acquisition by Rosneft of NADL shares through an exchange of assets and investments in NADL charter capital. Moreover, agreement’s options contemplate a possibility for Rosneft to increase its stake in NADL according to the development of the cooperation.

The deal is implemented within the Rosneft’s strategy aimed at strengthening and expanding its service business potential, increasing its technological capabilities and will allow the Company to acquire a fleet of platforms and drilling rigs for the conduction of on and offshore drilling operations. The cooperation will expand the field of activities of the Company in the sphere of designing and engineering of specialized marine equipment.

The final parameters of the deal, including the amount of Rosneft’s cash contribution in NADL’s charter capital, will be defined upon receiving corporate and accountant’s approvals which is expected till the end of the 2014.

According to the agreement, any break rights expire after 77 days. Upon closing Rosneft will be entitled to appoint two of seven Board seats on NADL’s Board of Directors.

Related: Rosneft to buy share in North Atlantic Drilling

Commenting on the signing Rosneft President Igor Sechin said: “Rosneft, Seadrill and NADL are creating a unique international partnership which will allow Rosneft to secure its drilling program. This deal will allow Rosneft to acquire new capabilities in the sphere of oilfield services, by engaging the best professionals, with unique expertise in operations in harsh climate conditions. The Company will notably strengthen its positions on the market of high-technology oilfield services alongside with world’s sector leaders. It is also important to notice that a significant increase in the price of NADL shares, recorded after the arranging of the fundamental settlement on May, 24 2014, confirms the profitableness of the partnership both for Seadrill and NADL and for our Company.”

In a separate statement, NADL said it would purchase a significant portion of Rosneft’s land drilling fleet in Russia. Approximately 150 rigs will be acquired along with an award of new 5 year contracts with Rosneft for these units.

Following the preliminary Investment and Cooperation announcement in May and the completion of the binding offshore contracts in July, NADL today has agreed to acquire a significant portion of Rosneft’s land drilling fleet. Rosneft will receive as consideration an approximate 30% stake in NADL by receiving primary shares at the price agreed upon in May of US$9.25 per share, with the balance being paid to NADL in cash. Following the transaction Seadrill Limited will continue to own more than 50% of NADL.

Alf Ragnar Lovdal, Chief Executive Officer of NADL says in a comment, “We are very pleased with the execution of this important transaction and welcome Rosneft as an equity partner and to our Board of Directors.”

This binding agreement is consistent with the provisions of the Investment and Cooperation Agreement between Seadrill, NADL and Rosneft announced on May 24, 2014.

Related: NADL sends rig fleet to Russian waters in $4B deal

 

August 22, 2014

 

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