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SapuraKencana Petroleum Buys Seadrill's Tender Rig Business for $2.9B

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SapuraKencana Petroleum Buys Seadrill's Tender Rig Business for $2.9B

SapuraKencana Petroleum is buying Seadrill's rigs business, including its full tender rig organization, for an enterprise value of $2.9 billion, Seadrill said in a statement Monday.

The total enterprise value includes $363 million in remaining capital expenditure linked to a newbuilds program and all the debt in Seadrill's tender rig business, approximately $800 million as of Dec. 31.

A non-binding memorandum of understanding (MOU) signed Monday could see SapuraKencana Petroleum taking control of an enlarged rig business, which comprises of 16 tender rigs in operation, and an additional five units currently under construction. The operating rigs and newbuilds are currently contracted under long-term fixed price contracts with Chevron, Shell, PTTEP and Petronas Carigali.

"The total backlog amounts to $1.55 billion as of end of October 2012. The majority of the operating rigs are currently deployed in Southeast Asian waters. Of the 15 operating rigs, nine are barges and six are semi-tenders, which are capable of operating in water depths of up to 6,500 feet," Seadrill said in the statement.

The MOU also includes a provision for SapuraKencana Petroleum to enter into a joint venture with Archer Limited – a 40 percent owned subsidiary of Seadrill – to introduce the latter's wireline services into the Asian market.

The deal needs approval from Seadrill's tender rig organization and its existing customers, and requires further due diligence procedures, closing adjustments, regulatory approvals. In addition, both of the companies need to reach an agreement on the terms of the sale and purchase agreement.

SapuraKencana Petroleum said in a statement Monday that it expects to execute the agreement Jan 21, 2013. SapuraKencana Petroleum, whose shares were placed under a trading suspension from 9:00 a.m. to 5:00 p.m. local time, was unreachable for further comments Monday.

SapuraKencana Petroleum's shares trade on the Bursa Malaysia, while Seadrill's shares trade on the New York Stock Exchange. 

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