New Wave Media

April 29, 2018

Odfjell Drilling buys “Deepsea Nordkapp”

Odfjell Drilling announced that Aker BP has today awarded Odfjell Drilling a 2 year firm drilling contract with 1+1 year optional periods. The day rates for the drilling contract will be based on market terms to be determined prior to commencement of drilling operations. In addition to the market linked day rate, a performance bonus as agreed in the alliance agreement with Aker BP, as announced on 21 November 2017, will apply. The contract has a minimum value of USD 245 million, subject to certain adjustments.  The commencement of drilling operations is expected in Q2/Q3 2019.

 
For the purpose of the drilling contract with Aker BP, Odfjell Drilling has entered into an agreement with Samsung Heavy Industries (“SHI”) to purchase the former called drilling unit Stena MidMax (the “Unit”) for USD 505 million. The Unit is an enhanced Moss Maritime CS-60 winterized and purposely built for harsh environment areas. The Unit will meet Odfjell Drilling’s requirements for delivering highly efficient operations. Odfjell Drilling  has agreed to pay a pre-delivery instalment of approximately USD 220 million within 30 April 2018, while the remaining purchase price is payable on delivery of the Unit. The Unit will be named “Deepsea Nordkapp”.   
 
As informed in the company presentation published on 19 April 2017 in connection with the Private Placement (the “Company Presentation”), the Odfjell Drilling intends to finance the acquisition of the Unit through (i) a contemplated USD 325 million senior secured term loan facility, (ii) proceeds from the Private Placement, (iii) proceeds from a contemplated issue of preference shares to an affiliate of Akastor AS (“Akastor”) and (iv) a seller's credit from SHI of USD 48.25 million.
 
Odfjell Drilling is in constructive dialogue with bank lenders for the USD 325 million new senior secured term loan. The senior secured term loan is expected to have a similar structure as Odfjell Drilling’s existing term loans as further described in the Company Presentation.
 
Furthermore, Odfjell Drilling has now signed a preference share investment agreement and a warrant investment agreement with an affiliate of Akastor ASA to carry out a USD 75 million preference share issue and an issuance of warrants for 5,925,000 common shares in Odfjell Drilling to such affiliate, on the main terms described in the Company Presentation. The issuance of the preference shares and the warrants is subject to the approval at a special general meeting of Odfjell Drilling which will be convened separately. The board of directors of Odfjell Drilling has resolved to propose to the special general meeting that the 16,123,125 preference shares and the warrants for 5,925,000 common shares be issued.
 
Quote Simen Lieungh, CEO of Odfjell Drilling, “Expanding our fleet with another modern harsh environment semi is an important step in our strategy of growth, and strengthens our position in the market as the preferred harsh environment drilling contractor.
 
This drilling contract with Aker BP exemplifies the mutual benefits of the Alliance partnership, whereby Aker BP has now secured a second advanced harsh environment drilling unit, having secured a contract for the GVA unit Deepsea Stavanger in December 2017. Odfjell Drilling is very pleased to have this opportunity with Aker BP and we aim to hit new records in drilling efficiency and be a significant contributor to Aker BP achieving its ambitious targets.”
 
Samsung Heavy IndustriesAkastor ASAAker BP