Seadrill Ltd., Oslo, (NYSE: SDRL; Oslo: SDRL) will acquire all of the outstanding shares in Scorpion Offshore Ltd. (Oslo: SCORE) for approximately US$562.5 million, giving it a majority ownership.
Ensco (Bermuda) Ltd., a subsidiary of global offshore drilling contractor Ensco Plc, London, (NYSE: ESV) will no longer proceed with its proposed acquisition of Scorpion Offshore.
As of March 31, Scorpion Offshore had approximately 89.7 million shares outstanding. Scorpion Offshore operates a rig fleet comprising seven recently built LeTourneau Super 116 jackup rigs that can drill in up to 350 feet of water to a total depth of 30,000 feet. All seven rigs are currently contracted for up to three years, with an average dayrate of US$167,000.
On May 28, Ensco lodged a partial bid to purchase a 19% market share in Scorpion Offshore for approximately US$6.14 per share (NOK 39.50 per share), for some 17 million shares. Ensco, in an attempt to outbid Seadrill, sweetened its cash offer the same day to a final price of approximately US$6.20 (NOK 40 per share).
Seadrill subsequently purchased more than 9 million Scorpion shares, bringing its total holdings in the company to more than 45 million shares, or a little more than 50% of the issued shares in Scorpion. The acquisition of the additional shares was made through Pareto Securities ASA at a price of US$6.26 per share (NOK40.50 per share).
Seadrill is expected to make a mandatory offer for all of the remaining shares in Scorpion Offshore this week.
Seadrill Management chief executive Alf Thorkildsen says, "We decided to increase the offer price after a thorough evaluation of the situation. Special emphasis was given to the strengthening of the U.S. dollar against NOK (Norwegian Kroner) since the original offer was launched and the significant contract backlog in Scorpion limited the risk associated with the transaction."
Thorkildsen notes that the acquisition of Scorpion Offshore will create the largest modern jackup rig fleet, with a total of 14 units built after 2006.
Seadrill operates 41 units consisting of drillships, jackups, semisubmersible drilling rigs and tender rigs for operations ranging from shallow to ultra-deepwater areas.
Ensco operates 39 jackups, four ultra-deepwater semisubmersibles and one barge rig. The drilling contractor has four additional ultra-deepwater semisubs under construction.
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