Seadrill Limited announces sale of seven jack-ups
Hamilton, Bermuda, September 01, 2022 – Seadrill Limited (“Seadrill” or the “Company”) (XOAS: SDRL) announces today that it has entered into a binding Share Purchase Agreement (“SPA”) with subsidiaries of ADES Arabia Holding Ltd. (together, “ADES”) to sell the legal entities that own and operate seven jack-ups (the “Jack-up Sale”) in the Kingdom of Saudi Arabia.
Upon completion of the Jack-up Sale, the AOD I, AOD II, AOD III, West Callisto, West Ariel, West Cressida, and West Leda will be owned by ADES. ADES will also employ the crews operating the rigs and will hold the drilling contracts related to the rigs. The total consideration for the Jack-up Sale is USD 628 million in cash, subject to adjustment for working capital and other items, and reimbursement to Seadrill for any project costs spent at the time of closing in relation to the reactivation of the three stacked jack-ups, namely the West Ariel, West Cressida and West Leda (“Reactivation Rigs”). This translates into approximately USD 100 million per rig on a ready to drill basis.
The proceeds from the Jack-up Sale enable Seadrill to significantly de-leverage its balance sheet and to eliminate outstanding capital expenditure for the Reactivation Rigs.
The Jack-up Sale is subject to customary closing conditions, including approval of competition authorities in Saudi Arabia, and is anticipated to close within the fourth quarter of 2022. Seadrill will provide customary transition support services to ADES for a limited period of time following closing.
Simon Johnson, Seadrill Chief Executive Officer, commented, “The sale of seven jack-ups to ADES is transformative for Seadrill. We are pleased to announce this transaction, which we believe crystallizes the valuation of these rigs at a substantially higher level than currently implied in Seadrill’s share price. It will also enable us to significantly de-lever our balance sheet, positioning us for future opportunities.”
The Jack-up sale is not expected to have a material impact on our revenue and Adjusted EBITDA guidance for 2022, as disclosed within our 2Q 2022 earnings release. Our capex and long-term maintenance guidance range of $320 million to $360 million could change materially depending on the date the transaction closes. Approximately $120 million of expenditures relating to the reactivation and upgrading of the Reactivation Rigs is included within the range disclosed. The range is likely to reduce to the extent the transaction closes prior to year-end as expenditures subsequent to the transaction closing will be incurred by the buyer. Furthermore, any such capital expenditures incurred on these rigs prior to closing will be fully reimbursed by the buyer on closing of the transaction.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. This stock exchange announcement was published by Simon Woods at Hawthorn Advisors, at the date and time set out in this announcement.
Seadrill is a leading offshore drilling contractor utilizing advanced technology to unlock oil and gas resources for clients across harsh and benign locations around the globe. Seadrill’s high-quality, technologically-advanced fleet spans all asset classes allowing its experienced crews to conduct operations across geographies, from shallow to ultra-deep-water environments.
This announcement includes forward-looking statements. Such statements are generally not historical in nature, and specifically include statements about the Company’s plans, strategies, business prospects, and expectations about the closing of the Jack-up Sale, the proceeds therefrom and the use of such proceeds.
These statements are made based upon management's current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, offshore drilling market conditions, including supply and demand, dayrates, fluctuations in the price of oil, international financial market conditions, changes in governmental regulations that affect the Company or the operations of the Company’s fleet, the review of competition authorities and other factors listed in our public filings. The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement.
Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should also keep in mind the risks described from time to time in the Company’s filings with the SEC, including its Annual Report on Form 20-F for the year ended December 31, 2021, filed with the SEC on April 29, 2022 (File No. 001-39327).
This information is subject to the disclosure requirements pursuant to article 19 of the Regulation EU 596/2014 (the EU Market Abuse Regulation) and section 5-12 of the Norwegian Securities Trading Act.