Houston-headquartered driller Northern Offshore (NOF) is to be combined with Chinese-controlled Blue Ocean Drilling into a new firm if a deal with Shandong Offshore International Co. worth about US$160 million (NOK 1.3 billion) is agreed.
The deal, which has been recommended for approval by the board of Oslo Stock Exchange listed NOF, would create a new firm with six, high-specification new build deepwater jackups under construction.
NOF, which was founded in 2000, and has been controlled by Norway's John Fredriksen, currently owns four drilling units operating in South Asia, the North Sea and West Africa, and one floating production unit, operating in the Northern UK North Sea, with two high-specification LeTourneau Super 116E jackups under construction.
Blue Ocean, which has offices in Houston, has two Gusto MSC CJ46 deepwater jackup rigs under construction at Shanghai Waigaoqiao Shipbuilding in Shanghai. The firm also has options with the same shipbuilder for up to four Gusto MSC CJ50s.
The move, which would see NOF's leadership team retained, is to be put to NOF's shareholders at a special general meeting expected to be held on or about 15 July. NOF's board says the offer represents a cash deal, "at a premium without the risks associated with public market sentiment and the current economic environment."
The deal comes as drillers face a tough market, with operators cutting back spending amid $60/bbl oil prices, following a steady period of $100+ prices. Earlier this month, Hercules Offshore said it planned for file for Chapter 11 bankruptcy protection, Vantage Drilling has been seeking its strategic options and Transocean has been cold-stacking units, among others.
But, Yu Bing, director of Shangdong, and Dr. Sun Yuanhui, chairman of Blue Ocean Drilling, said more deals could be on the table to further grow the new company: “Enhancement of the new NOF fleet is already underway with the combined NOF and Blue Ocean Drilling new–builds; six high specification, deepwater jackups due to be delivered in 2016 through 2018, which will make the new NOF an attractive partner to those exploration and production companies looking for premium, high-specification assets operated by a proven organization whose focus is operations and efficiencies that can contribute to lowering their clients total well costs. We’ll continue to evaluate and act upon further opportunities which meet the technical and financial criteria of the new Northern Offshore as we examine ways to further enhance our fleet in an accretive manner.”
Gary W. Casswell, President and CEO of NOF, said: “This transaction represents a major milestone in Northern Offshore’s previously stated strategy to transform our company to a niche, premium jackup drilling contractor with new, state of the art assets. With the exception of the Norwegian continental shelf, NOF will be able to operate in all major petroleum resource regions around the world. Combining the four under construction high-spec jackups of Blue Ocean Drilling with Northern Offshore’s two under construction state of the art jackups, with deliveries in 2016 thru early 2018, we will realize organizational synergies and have the opportunity to build additional critical mass in our current operations in the North Sea and Asia Pacific as well as position us to pursue new clients in new areas. Going forward, with the support of our new board of directors, we will be opportunistic while remaining fiscally responsible to continue growing the company with the selective acquisition or new construction of additional premium jackup assets."
Separately, Northern Offshore announced settlement with CAMAC Parties over Energy Searcher jackup contract dispute. Its subsidiary Northern Offshore International Drilling Company (NOIDC) reached an agreement with Oceanic Consultants Nigeria, Allied Energy, Erin Energy Corporation and CAMAC Petroleum, referred to collectively as the CAMAC PARTIES, with respect to a contract dispute, announced 12 January, settling all disputes and claims between NOIDC, NOF and the CAMAC PARTIES.
Image: Northern Offshore's Energy Endeavor
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