Dolphin Drilling raises $45 million for rig mobilisation & reactivation
Norway-based Dolphin Drilling has raised $45 million through a private placement to take advantage of increased day rates in the offshore drilling market, which will enable it to cover mobilisation costs for one of its semi-submersible drilling rigs along with the reactivation of another rig in its fleet.
Cyprus-based and Oslo-listed S.D. Standard ETC (SDSD) – which changed its name in February 2022 from S.D. Standard Drilling and acquired an interest in the Norway-based Dolphin Drilling in May 2022 – informed on Monday that the book-building period for a contemplated private placement of new shares in Dolphin Drilling – under name change from NFH 220436 – which was announced on 1 September, was completed on 2 September 2022, and the company’s board of directors have resolved the conditional allocation of shares in the private placement.
In a bid to capitalise on the increasing day rate environment, Dolphin Drilling undertook this equity issue, raising gross proceeds of $45 million – increased from $40 million at launch – as the private placement “attracted strong interest from high-quality institutional investors.”
Furthermore, the offer shares are expected to be settled on or about 12 September 2022 with existing shares on a delivery-vs-payment basis through a share lending arrangement expected to be entered into between the company, its large shareholders and DNB Markets, a part of DNB Bank. The firm will seek to register its shares on the Euronext N-OTC pending approval of its application for admission to trading on Euronext Growth Oslo, with the start of trading expected on or about 13 September 2022.
According to S.D. Standard ETC, the pre-money share ownership of Dolphin Drilling mirrors the existing shareholding of Dolphin Drilling Holdings Limited, whereby SDSD will own approximately 38-39 per cent, while Strategic Value Partners LLC (SVP) and other shareholders will own the remaining 52 per cent and 9-10 per cent of the company, respectively.
Moreover, prior to completion of the private placement, the firm will, directly and indirectly, acquire, by way of a share-swap agreement, 100 per cent of the shares in Dolphin Drilling Holdings Limited, the current top company of the Dolphin Drilling group against the issuance of consideration shares to the existing shareholders. The completion of the private placement by the settlement of offer shares toward investors is conditional upon the company’s corporate resolutions, completion of the share swap, and certain other customary conditions.
S.D. Standard ETC underlined that there can be no guarantee that these conditions will be fulfilled within the time required for settlement on 12 September 2022. If these conditions have not been fulfilled by 1 October 2022, the private placement will be cancelled. Following the closing of the private placement, Dolphin Drilling will apply for its shares to be registered on Euronext Growth Oslo. Once this is approved by the Oslo Stock Exchange, the first day of the listing is expected to be in mid-October 2022.
S.D. Standard ETC underscored that the net proceeds from the private placement will primarily be used by Dolphin Drilling to finance the special periodic survey (SPS) and mobilisation of the Blackford Dolphin rig and reactivation of the Borgland Dolphin rig as well as general corporate purposes and working capital.
The Norwegian drilling contractor owns three harsh environment semi-submersibles which have been rebuilt with 5th/6th generation topsides. Recently, the company received a letter of award (LoA) for the Blackford Dolphin rig in Nigeria at $232,500 per day plus a mobilisation fee of $12 million, starting in late 2022. The Blackford Dolphin is a semi-submersible drilling rig of an Enhanced Aker H-3 design built in 1974.
S.D. Standard ETC believes that Dolphin Drilling is well-positioned to secure additional contracts at “attractive levels,” benefitting from current market improvements and positioning in the niche, semi-submersible market. In addition, the opportunity to acquire or manage two latest generation harsh environment semi-submersibles as well as to manage and operate non-owned rigs provide “attractive additional growth opportunities.” The Dolphin Drilling group has a net cash position of approximately $20 million as of 31 August 2022.
Martin Nes, Chairman of SDSD and Dolphin Drilling, remarked: “Dolphin Drilling has attractive assets, a strong team and a solid platform to leverage on the favourable market development with improved rates. The contract for Blackford Dolphin underlines the potential of the company and its assets, and we believe Dolphin Drilling will capitalise on the continued expected tight rig market for the rest of the fleet.”