Offshore drilling contractor Noble Corp., Zug, Switzerland, (NYSE: NE) plans to acquire privately held drilling company FDR Holdings Ltd. (Frontier Drilling), George Town, Grand Cayman, for cash on hand and debt financing for approximately US$2.16 billion. The deal will add six more rigs to Noble’s extensive global offshore fleet.
Noble will acquire assets comprising three drillships, including two Bully-class joint venture-owned rigs under construction; two conventionally moored drillships, including one Arctic-class rig; one conventionally moored deepwater semisubmersible drilling rig; and one dynamically positioned floating production, storage and offloading vessel. The fleet is currently supported by an aggregate 23 years in rig contracts, which are expected to generate approximately US$3.2 billion in gross contract backlog (US$2 billion net).
Noble currently owns and operates a global offshore fleet of 62 drilling units, which includes the two rigs under construction.
In conjunction, Noble and Dutch oil major Royal Dutch Shell Plc (NYSE: RDS) have signed separate agreements for two 10-year contracts for the Noble Globetrotter ultra-deepwater drilling rig (under construction until 2011) and an additional ultra-deepwater newbuild, slated for delivery in 2013. The companies have also signed a three-year extension for the Noble Jim Thompson deepwater semisub for a reduced dayrate of US$336,200. The same rate plus an increase for capex will be applied on the three-year extension beginning March 2011.
Additionally, Shell will pay reduced dayrates to Noble on rigs affected by the 180-day deepwater drilling moratorium in the Gulf of Mexico, allowing the drilling contractor to retain its offshore rig personnel.
The Shell contracts are expected to contribute $4 billion in contract backlog during more than 25 rig years.
Noble plans to secure permanent financing and will fund the acquisition with a combination of cash, drawdown on an existing credit facility and an $800-million bridge credit facility. The company will pay the remaining construction costs for the two Bully rigs and will assume Frontier’s 50% portion of the outstanding balance of credit facilities of the Bully I and Bully II joint ventures—approximately $311 million as of May 31.
Simmons & Co. International, Barclays Capital and SunTrust Robinson Humphrey Inc. are advisors to Noble. Goldman Sachs & Co. is advisor to Frontier. FBR Capital Markets & Co. also provided advisory services to certain Frontier shareholders.
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