Offshore drilling contractor Seadrill has completed the acquisition of Aquadrill, formerly known as Seadrill Partners. The firm believes that this combination creates “an industry-leading offshore drilling company, with a modern and high specification fleet.”
As a result of the acquisition, which was announced in December 2022, Aquadrill became a wholly-owned subsidiary of Seadrill. At the time of the original announcement, Seadrill said that Aquadrill was valued at approximately $958 million and following completion, Seadrill shareholders and Aquadrill unitholders would respectively own 62 per cent and 38 per cent of the outstanding common shares in the company.
With the acquisition wrapped up, Seadrill issued an aggregate of 29,866,505 common shares to former Aquadrill unitholders and equity award holders, resulting in issued share capital of $798,665.03 divided into a total of 79,866,503 Seadrill common shares, each with a par value of $0.01, validly issued, and fully paid and non-assessable. The offshore drilling player expects to have a streamlined cost structure and be well-positioned for further growth given its “stronger” credit and liquidity profile, providing “attractive” cash flows.
Simon Johnson , Seadrill’s President and CEO, remarked: “We are delighted to have completed the acquisition of Aquadrill, welcoming its fleet back into the Seadrill family. The management team is focused on efficiently and rapidly integrating the two companies in order to realise the synergies arising from the transaction.
“Today is a crucial milestone for our company and we firmly believe that we are well-placed for this industry upcycle. We remain optimistic in the continuing development of the rig market and our ability to deliver further value to our shareholders.”
According to Seadrill, the combination with Aquadrill presents “a compelling strategic rationale” for all stakeholders by creating “a leading offshore driller with best-in-class fleet,” which will be in “a strong position to serve a broader range of customers, with one of the youngest and most technologically advanced fleets in the industry,” and a combined backlog of $2.6 billion .
The combined company will own 12 floaters – including seven seventh-generation drillships – three harsh environment rigs , four benign jack-ups , and three tender-assisted rigs while seven rigs will be managed under strategic partnerships.
Furthermore, this combination is expected to provide increased exposure and upside to the improving market, as the firm will have a diversified portfolio of contract coverage, with additional active fleet capacity to deploy in a rising market environment across critical basins in the Golden Triangle .
In addition, Seadrill sees “a significant synergy potential” with the combined company being “uniquely positioned to rapidly integrate and realise identified and achievable synergies” of at least $70 million annually on a run-rate basis while all synergies are expected to be fully realised within two years of closing the transaction.
Moreover, the offshore drilling contractor envisions a strong cash flow generation and further strengthened balance sheet, as the combined company should benefit from “an enhanced cash flow profile,” with significant credit and liquidity improvement, and with access to a potentially lower cost of capital.
As previously disclosed, Julie Robertson and Simon Johnson will continue in their respective roles as Chair of the Board of Directors and President and Chief Executive Officer. Additionally, Harry Quarls and Jonathan Swinney were appointed to fill the two new positions on Seadrill’s board of directors that were approved at the firm’s annual general meeting of shareholders on 21 March 2023.
Regarding Seadrill’s recent activities, it is worth noting that the company secured a contract extension for one of its drillships last month in the U.S. Gulf of Mexico while another drillship embarked on its assignment at a field offshore Brazil with Petrobras.
The drillship started its contract with Petrobras only a week after the West Jupiter drillship did the same.