SapuraKencana Petroleum Bhd. (SAKP), Malaysia’s biggest oil and gas services company, agreed to buy Seadrill Ltd.’s (SDRL) tender-rig operations in a $2.9 billion deal.
Seadrill, the Norwegian oil-rig company controlled by billionaire John Fredriksen, will receive $350 million of new SapuraKencana shares as part of the deal, doubling its stake to about 13 percent, according to a stock exchange filing in Kuala Lumpur today. The transaction is subject to approval from existing customers, Seadrill said in a separate statement.
Selangor-based SapuraKencana was formed this year following the 11.9 billion-ringgit ($3.9 billion) merger between Malaysia’s SapuraCrest Petroleum Bhd. and Kencana Petroleum Bhd. Before the merger, they won rights to jointly develop their first oilfield off the country’s eastern coast with Petrofac Ltd. (PFC) By joining forces, they want to bid for larger contracts and further expand into exploration.
“Seadrill believes in the potential of SapuraKencana’s expansion,” Fredriksen, Seadrill’s chairman said in the statement. “Net proceeds from the transaction will be redeployed as equity to aggressively grow our deep-water fleet and also open up for significant new investment in the jack-up sector.”
SapuraKencana would operate a total 16 existing tender-rigs after the deal, with five more under construction, according to the filing. The $2.9 billion enterprise value of transaction includes about $363 million in remaining capital expenditure on the new rigs and about $800 million of bank debt, it said.
The balance of $1.39 billion is expected to be financed through external borrowing, a $187 million seller’s note and internally generated funds and equity, the filing showed.
The existing rigs are currently on long-term lease to companies including Petroliam Nasional Bhd., Chevron Corp. (CVX:US) and Royal Dutch Shell Plc (RDSA), it said. SapuraKencana will also be offered a right to manage three further rigs which are not part of the deal, according to the statement.
Oslo-based Pareto Securities said today in a note that the implied valuation of the deal was below the investment bank’s $3.3 billion estimate for the tender rigs.
Seadrill, which is managed out of Stavanger, Norway, fell 1 percent to 232 kroner in Oslo trading as of 10:50 a.m.
SapuraKencana shares were halted in Kuala Lumpur today for the announcement. The stock rose 3.8 percent to 2.71 ringgit on Nov. 2, up 21 percent from its debut price on May 17 following the merger.
“After a period of transformation and consolidation, I’m truly excited about entering the next phase of growth with Seadrill to together create an undisputed Asian offshore services champion,” Shahril Shamsuddin, SapuraKencana’s group chief executive officer, said in the statement.
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