Seadrill, NADL Ink Agreement to Partner Rosneft in Russia's Drilling Market
North Atlantic Drilling Ltd. (NADL or the Company) and Seadrill Limited (Seadrill) announced Monday that an Investment and Co-operation Agreement (the Agreement) has been executed with Rosneft in order to pursue growth opportunities offshore and onshore in the Russian market through at least 2022. As part of these proposed opportunities, NADL will enter the onshore drilling market in Russia and enter into contracts for multiple offshore assets. In addition Rosneft will be acquiring a significant equity stake in NADL.
NADL has already contracted to drill the first two wells in the Kara Sea, as part of Rosneft and Exxon's joint venture during 2014 and 2015.
As part of the Agreement, a number of long term contracts for NADL's near-term availability are expected to be signed as well as a commitment to future contracts and newbuild projects. The Agreement envisions initial employment of up to 9 offshore rigs to Rosneft with a total commitment of 35 rig years.
Closing of the transaction is expected during the second half of 2014, subject to customary due diligence, negotiation of detailed transaction terms, and respective Board approvals.
The Company's operations in Stavanger will continue as today and will focus on the current operations and future growth. The strategic partnership is likely to entail opening up of other regional offices to serve local growth in demand. Overall activity levels are expected to increase significantly and provide employees with attractive opportunities.
Seadrill, after the initial transaction, will remain the largest shareholder in NADL. The Board is confident that the Agreement with Rosneft will strengthen NADL as the leading harsh environment drilling company. It will position NADL to uniquely increase the value for all of the Company's shareholders and make it an even more attractive workplace for the employees.
Alf Ragnar Lovdal, CEO of NADL says in a comment, "We have sought to access the growth opportunity represented by the Russian market for several years, and we are very pleased to have reached an agreement with Rosneft for this landmark transaction. The Russian market is one of the most attractive opportunities in the world and offers tremendous growth potential for North Atlantic Drilling. By partnering best in class drilling with a supermajor who produces over 5 million barrels per day, we, after closing of this transaction, will have created a powerful force in the Russian market and for Arctic regions on a global basis. We look forward to closing this important transaction and working with Rosneft for many years to come"
NADL is an offshore harsh environment drilling company with focus on the North Atlantic basin. The company has nine drilling units in the fleet, including five semi-submersibles, a drillship, and three jack-up rigs. Seadrill Limited currently owns 70 percent of the outstanding shares and the company is listed on the NYSE and Norwegian OTC with a market capitalization of approximately $2.1 billion.
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