Offshore drilling firm Seadrill has signed a deal to sell seven jack-up drilling rigs in Saudi Arabia to ADES.
Upon completion of the sale the rigs 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 rig sale is $628M 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. This translates into approximately $100 million per rig on a ready to drill basis, Seadrill said.
Seadrill said it would use the proceeds from the sale to "significantly" de-leverage its balance sheet and to eliminate outstanding capital expenditure for the three reactivation rigs.
The sale is expected to close within the fourth quarter of 2022.
Simon Johnson, Seadrill Chief Executive Officer, said: "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."
ADES has been on a jack-up rig shopping spree lately, buying jack-up rigs from Aban Offshore, Maersk Drilling, Noble Corp., Vantage Drilling, and Valaris. The company in May also agreed to charter two newbuild jack-up rigs directly from the shipyard, Keppel O&M.
Keppel O&M then cited Clarkson's research published in April 2022, according to which rig markets have continued to tighten in 2022, with overall utilization at its highest level since 2015 and dayrates rising noticeably for jackups and floaters.
"The outlook for the jackup market is optimistic, with demand expected to increase across 2022-23, underpinned by strong activity of national oil companies," the company said.