Seadrill parting with three jack-up rigs for $338 million

Bermuda-headquartered offshore drilling contractor Seadrill is in the process of disbanding Gulfdrill LLC, a 50:50 joint venture (JV) between the firm and Gulf Drilling International (GDI), thanks to a deal to sell three jack-up rigs, which are working in Qatar, to its joint venture partner.

West Tucana jack-up rig; Source: Seadrill

While disclosing its plans to sell the West CastorWest Telesto, and West Tucana jack-up rigs, part of the Qatar jack-up fleet and bareboat chartered to Gulfdrill, Sedrill confirmed in June 2023 that it was also holdings talks with parties interested in buying its 50% equity interest in the joint venture.

The Bermuda-based player has now entered into a definitive agreement to divest the rig trio and its 50% equity interest in the joint venture that operates these rigs offshore Qatar to its joint venture partner, Gulf Drilling International, for cash proceeds of $338 million.

While the sale is subject to certain conditions, including approval or non-objection of the Qatar Financial Centre Authority and approval of the shareholders of GDI’s parent company, it is expected to close early in the third quarter of 2024.

Simon Johnson, Seadrill’s President and Chief Executive Officer, commented: “Our divestiture of the Qatar jack-up fleet and exit from the joint venture are consistent with our ongoing efforts to strengthen and simplify our business and will allow us to focus on Seadrill’s core business: operating deepwater rigs across the Golden Triangle and similarly advantaged geographies.

“We believe that our strengthened liquidity position upon completion of the jack-up sale, coupled with our conviction in the deepwater floater market outlook and Seadrill’s competitive positioning within it, supports the expansion of our share repurchase program.”

In line with this, Seadrill’s board of directors has increased the firm’s aggregate share repurchase authorization, allowing the company to repurchase up to an additional $500 million of its outstanding common shares over two years, beginning after the current share repurchase program is completed.

The deal for the sale of these three rigs comes on the heels of the additional work the Bermuda-based firm recently secured for two drillships in its rig fleet, after reporting another contract and extension in January 2024, totaling approximately $97.5 million, along with a timeline for taking over management services for another drillship.