Saudi Arabia’s ADES has struck a deal to buy seven jack-ups from Seadrill for $628 million in cash.
ADES will take control of the AOD I, AOD II, AOD III, West Callisto, West Ariel, West Cressida and West Leda. It will also employ the crews operating the rigs and the contracts.
Seadrill will reactivate the three stacked rigs – the West Ariel, the West Cressida and West Leda. ADES will reimburse Seadrill for these costs, which are around $100mn per rig.
Seadrill CEO Simon Johnson said the sale of the seven jack-ups would be “transformative” for his company.
“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.”
Seadrill will use the cash to cut its debt and outstanding capital expenditure on the rigs under reactivation. The company has long-term debt of around $950mn.
The company expects the deal to close in the fourth quarter of this year. Seadrill will continue to provide some support services to ADES following closing for a limited time.
The sale should not have a material impact on earnings guidance for 2022, Seadrill said. Capex and maintenance is guided at $320-360mn, which could change depending on the date the deal closes.
The spending includes around $120mn included on the reactivation work.
During the second quarter, Seadrill added firm contracts for the three rigs it is reactivating. It also won three-year extensions for the AOD I, AOD III and West Callisto, worth $361mn. The rigs working in Saudi command a day rate of around $110,000.
The deal will leave Seadrill with only four jack-ups, three of which are operating in Qatar. The fourth is cold stacked in Malaysia.