2011-04-07-2011-02-14-2011-04-04

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
MM
Description

Acquired harsh-environment drilling business.

Hamilton, Bermuda-based North Atlantic Drilling Ltd. has completed the acquisition of the harsh-environment drilling business of Seadrill Ltd., Oslo, (NYSE: SDRL; Oslo: SDRL) for a total US$4.1 billion.

The deal includes the assumption of approximately US$2 billion of Seadrill's existing debt and payment obligations. This will be financed by drawing down the loan facility in mid April. North Atlantic Drilling has also issued a US$500-million seven-year bond loan with a coupon of 7.75%, subscribed for in full by Seadrill as part of the settlement. The remaining part of the purchase price has been paid in cash and shares.

North Atlantic Drilling has issued 750 million new shares to Seadrill at a subscription price of US$1.70. North Atlantic Drilling now has 1 billion shares issued, of which Seadrill holds 75%.

North Atlantic Drilling will, effective from April 1, have five drilling units in operation. North Atlantic Drilling's sixth rig, the West Elara, is expected to be delivered from Jurong Shipyard during second-quarter 2011 and will then commence drilling operations under a contract with Statoil in the North Sea.

All 1,050 employees involved in the operations of the five existing operating units have accepted to be transferred from Seadrill to North Atlantic Drilling.

Seadrill has also decided to offer the recently ordered harsh-environment jackup drilling rig West Linus, which will be delivered in 2013, to North Atlantic Drilling at its cost. The unit has a five-year drilling contract in place for operations in Norway with ConocoPhillips, Houston (NYSE: COP). It is anticipated that the acquisition of West Linus, including the contract coverage, can be completed without raising additional equity.

As a consequence of the closing, the right for North Atlantic Drilling's shareholders to put their North Atlantic Drilling shares to Seadrill at the original issue price of US$1.70 per share will expire at close of business Oslo time on April 14.

Alf C. Thorkildsen, Seadrill Management AS chief executive, says, "This marks an important starting point for North Atlantic Drilling which will now commence operations with its rigs. We look forward to developing North Atlantic Drilling further, and believe the company is well positioned to take active leadership in a further consolidation of the fast-growing market for harsh-environment drilling units."