KUALA LUMPUR–SapuraKencana Petroleum Bhd. (5218.KU) plans to acquire the tender rigs business of Norway’s SeaDrill Ltd. (SDRL.OS) for an enterprise value of $2.9 billion, as the Malaysian oil and gas company seeks to bolster its offshore drilling operations in Southeast Asia.
Seadrill may receive up to $1.4 billion in cash, in addition to $350 million worth of new shares in SapuraKencana, said Shahril Shamsuddin, president and group chief executive of SapuraKencana during a conference call. After the transaction, Seadrill’s stake in SapuraKencana will rise to about 13% from 6.4%, he said.
As part of the deal, SapuraKencana, Malaysia’s largest oil and gas service provider by market capitalization, will take over 16 tender rigs mostly deployed in Southeast Asian waters with another five currently under construction, a joint statement from the companies said Monday. The rigs businesses had an order backlog worth $1.55 billion at the end of October, the statement said.
The additional tender rigs–which refer to a type of drilling rig that doesn’t need permanent installation–would likely help the Malaysian company consolidate its footprint in Asia and allow SapuraKencana to raise its prominence in the global market for the niche offshore segment.
“The deal is transformatory and revenue and profit upside potential is significant,” Mr. Shahril said, adding that earnings will get a boost from the first quarter of the next fiscal year that starts Jan. 31.
SapuraKencana will fund the acquisition through a mix of external borrowings, a seller’s note of up to $187 million, and internally generated funds and equity, the statement said.
“The net proceeds from the transaction will be redeployed as equity to aggressively grow our deep water fleet and also open up for significant new investments in the jack up sector, a sector which has shown strong signs of improvement,” said John Fredriksen, chairman and president of Seadrill, in the same statement.
SapuraKencana expects the deal to close by Jan. 31, said Mr. Shahril.
CIMB Investment Bank, Goldman Sachs and Maybank Investment Bank were appointed advisors to SapuraKencana for the transaction.
– Jason Ng, (c) 2012 Dow Jones & Company