Rosneft, Seadrill Ltd. and North Atlantic Drilling Ltd. (NADL) entered into a framework agreement. The cooperation would see the Russian producer exchanging assets for shares in the Norwegian drilling company, which specializes in harsh environment operations. Rosneft said it will also invest in NADL’s charter capital, with options to increase its stake at a later date, “according to the development of the cooperation.”
NADL will purchase a t0tal of approximately 150 rigs from Rosneft’s drilling fleet. Rosneft will also award new five-year contracts for these units.
Following previous contract announcements, NADL agreed to acquire a significant portion of Rosneft’s land drilling fleet. Rosneft will receive a consideration of approximately 30% stake in NADL by receiving primary shares at the price agreed upon in May of US$9.25 per share, with the balance being paid to NADL in cash. Following the transaction, Seadrill Ltd. will continue to own more than 50% of NADL.
The transaction is expected to close during 4Q 2014. According to the agreement, any rights expire after 77 days. Upon closing, Rosneft will be entitled to appoint two of seven board seats on NADL's board of directors.
This binding agreement is consistent with the provisions of the investment and cooperation agreement between Seadrill, NADL and Rosneft announced on May 24, 2014. Rosneft said that final details of the deal, including the amount of its cash contributions into NADL’s charter capital, will be defined YE 2014, following corporate approval.
Rosneft said the deal was in keeping with its strategy of “strengthening and expanding its service business potential, increasing its technological capabilities and will allow the Company to acquire a fleet of platforms and drilling rigs for the conduction of on and offshore drilling operations.”
The latest round of EU- and US-issued sanctions attempts to takes aim at Russian companies acquiring such offshore technology and equipment. In July 2014 Rosneft and NADL entered into multiple long-term offshore drilling contracts, for six offshore drilling rigs through 2022 to carry out Rosneft’s offshore projects, including harsh environment locations. The July agreement was completed just before the newest round of European Union (EU) and US-issued sanctions were enacted.
Earlier this month, ExxonMobil and Rosneft began drilling operations in the Kara Sea’s Universitetskaya-1, using one of NADL’s semisubmersible rigs, the West Alpha, in the East Prinovozemelskiy area.
The EU set sanctions hoping to stop Russia from using advanced oil technologies for offshore drilling, specifically in deepwater, the Artic and shale, however, the sanctions did not include gas exploration.
The exploratory drilling operations at the Universitetskaya-1 well defies Western-imposed sanctions against Rosneft, however, Russian Federation President Vladimir Putin launched drilling in Russia’s northern-most well through a videoconference.
Images of the West Alpha from Rosneft
Read more:
Rosneft, Statoil start Norwegian drilling
NADL and Seadrill announce partnership
Kara Sea spudded despite sanctions
Rosneft deals beat EU sanctions
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