Rival drillers eye Seadrill assets amid restructuring efforts

Offshore drilling contractor Noble Corporation and a consortium between two other drillers, Transocean and Dolphin Drilling, are reportedly looking to buy the assets of its bankrupt competitor Seadrill Limited, controlled by the Norwegian billionaire John Fredriksen.

Seadrill is currently working to emerge from Chapter 11 bankruptcy, its second in four years. Namely, following its bankruptcy in 2017 and its emergence in July 2018, the rig owner filed for Chapter 11 again in February 2021. At the point of filing, Seadrill had approximately $650 million in cash and did not require debtor-in-possession financing.

In April 2021, Seadrill asked creditors to write off more than 85 per cent of its debts in exchange for a 99 per cent stake in the reorganized company. In an annual report on 19 March, the company’s debt stood at $6.2 billion at the end of 2020, including $5.7 billion in secured credit facilities and $515 million in secured notes due 2025.

Citing people familiar with the matter, Reuters reported on Tuesday that the consortium between Transocean, Dolphin Drilling, and a third, unidentified party filed a bid for Seadrill in early July, offering cash, shares in Transocean, and to take on some of Seadrill’s existing debt.

Furthermore, Noble Corp. filed a bid for Seadrill’s assets in May, Reuters reported. Noble itself emerged from bankruptcy this year, in the same month when Seadrill filed for it.

Offshore Energy has reached out to Seadrill, seeking comment about these reports.

A spokesperson for Seadrill said: “Seadrill recognises that there is the need for consolidation in the offshore drilling industry and will play an active role once our restructuring has been completed later this year.

“Seadrill remains focused on the restructuring of our balance sheet which will lead to the conversion of a substantial portion of the existing debt into equity, leading to a minimal or nil return to current shareholders.

“We have made significant progress already and are focused on our next milestone, which is the filing of the Plan Support Agreement, with the backing of our secured lenders”.

As the company prepares to take the next steps in its financial restructuring, Seadrill has already elected a new CFO and a new COO as well as a new director to its board. The drilling contractor in May announced the appointment of Grant Creed as Chief Financial Officer and Leif Nelson as Chief Operating Officer, both effective immediately. Seadrill also appointed Svein Harald Øygard as a new board director.

It is also worth reminding in the context of Chapter 11 that Seadrill Partners – a limited liability company formed by Seadrill Limited to own, operate, and acquire offshore drilling rigs – has already emerged from bankruptcy in May 2021 after filing for it in December 2020.

Following its exit from bankruptcy, it has recently been revealed that Seadrill Partners took a new name, Aquadrill Offshore. As recently reported, Aquadrill has secured a one-well contract with Equinor for the Vela drillship for operations in the U.S. Gulf of Mexico. The total value for the firm portion of the contract is expected to be $55 million.

The Vela drillship is a 6th generation deepwater rig with operational history in the U.S. Gulf of Mexico. It is of a SAMSUNG 12,000 design built in 2013 by Samsung Heavy Industries in South Korea.

According to information on its website, Seadrill Limited owns 34 drilling rigs and manages 11 rigs on behalf of SeaMex, Northern Ocean, Sonadrill, and Aquadrill Offshore.