Rowan rolls into Norway rig sector

Published 02.07.2010 11:00:17 by John Bradbury

Rowan Drilling is buying up a Norwegian companies which own rights to three newbuild jackups.

Rowan has signalled its intent to enter a share purchase agreement with Skeie Technology, Skeie Tech Invest and Wideluck Enterprises, and has irrevocable undertakings from two other Norwegian firms, Skeie Holding and Trafalgar, to buy their shares in Skeie Drilling and Production (SKDP), which owns 48.8% of SKDP.

SKDP owns three new high-specification N-class jackup rigs which are being built at Keppel FELS in Singapore.

Rowan is securing the deal based on issuing 5,741 Rowan shares for every one million shares in SKDP – leaving Rowan Drilling owning 50.3% of SKDP shares, and the US rig-owner says it will tender for the rest of the SKDP shares it does not already own.

“Based on Rowan's closing stock price on June 30, 2010, and assuming the Company obtains 100% of the SKDP shares, the total purchase consideration would be approximately $1.2 billion, or $410 million per rig, substantially below the estimated replacement cost of an N-class rig,” Rowan has stated.

Keppel is due to delivery the three new rigs in September and December this year, and the last rig in June 2011, although SKDP is currently negotiating a six-month delay for the delivery of the rigs, in exchange for a higher final purchase price.

“This transaction is consistent with our stated objective of growing our offshore drilling business though the addition of high-spec equipment, and enables further global geographic and customer diversification of our drilling operations,” said Matt Ralls, president and chief executive of Rowan.

Ralls said with completion of the deal Rowan will own ten of the top twelve and 14 of the top 22 jack-ups in the global fleet today or under construction, based upon ODS-Petrodata rankings.

“We are also pleased to welcome Bjarne Skeie as a significant shareholder of Rowan. He has built an impressive organization at SKDP that should enable Rowan to advance our entry into the Norwegian drilling market,” Ralls said.

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