2010-06-30-2010-06-28-2010-07-28

Transaction Type
Announce Date
Post Date
Close Date
Estimated Price
$2,160.0MM
Description

Acquired Frontier Drilling, six drilling rigs for $2.16 billion; offshore global drilling fleet will expand to 68 rigs.

Offshore drilling contractor Noble Corp., Zug, Switzerland, (NYSE: NE) has acquired privately held drilling company FDR Holdings Ltd. (Frontier Drilling), George Town, Grand Cayman, with cash on hand and debt financing for approximately US$2.16 billion. Noble's extensive global offshore fleet has been increased to 69 units, including two rigs under construction and a FPSO.

The assets comprise three drillships, including two Bully-class joint venture-owned rigs under construction; two conventionally moored drillships, including one Arctic-class rig; one conventionally moored deepwater semisubmersible drilling rig; and one dynamically positioned floating production, storage and offloading vessel. The fleet is currently supported by an aggregate 23 years in rig contracts, which are expected to generate approximately US$3.2 billion in gross contract backlog (US$2 billion net).

In conjunction, Noble and Dutch oil major Royal Dutch Shell Plc (NYSE: RDS) signed separate agreements for two 10-year contracts for the Noble Globetrotter ultra-deepwater drilling rig (under construction until 2011) and an additional ultra-deepwater newbuild, slated for delivery in 2013. The companies also signed a three-year extension for the Noble Jim Thompson deepwater semisub for a reduced dayrate of US$336,200. The same rate plus an increase for capex will be applied on the three-year extension beginning March 2011. Additionally, Shell will pay reduced dayrates to Noble on rigs affected by the 180-day deepwater drilling moratorium in the Gulf of Mexico, allowing the drilling contractor to retain its offshore rig personnel.

The Shell contracts are expected to contribute $4 billion in contract backlog during more than 25 rig years.

Noble president and chief executive David Williams says, "With the addition of Frontier's units and personnel to the Noble fleet and in conjunction with our separate agreements with Shell, we have strengthened our capabilities and broadened our global footprint, doubled our backlog, and positioned the company to deliver even greater value both to our shareholders and our customers."

Noble provided a combination of cash, drawdown on an existing credit facility and an $800-million bridge credit facility. The company will pay the remaining construction costs for the two Bully rigs and will assume Frontier's 50% portion of the outstanding balance of credit facilities of the Bully I and Bully II joint ventures, approximately $311 million as of May 31. The acquisition is expected to be accretive to cash flow and to earnings in conjunction with beginning operations for the Bully rigs in 2011.

Simmons & Co. International, Barclays Capital and SunTrust Robinson Humphrey Inc. were advisors to Noble. Goldman Sachs & Co. was advisor to Frontier. FBR Capital Markets & Co. also provided advisory services to certain Frontier shareholders.