Photo: AOD I rig; Source: Seadrill

Seadrill to take full control of Asia Offshore Drilling

Offshore drilling contractor Seadrill has bought from Mermaid Maritime the minority holding of the share capital of Asia Offshore Drilling (AOD). Following completion, Seadrill will hold the entire share capital of AOD.

AOD is an associated company of Mermaid Maritime and Mermaid holds a 33.76 per cent stake in AOD with the remaining stake held by an affiliate of Seadrill.

In 2018, Mermaid entered into a transaction support agreement with Seadrill and that agreement provided inter alia that Seadrill would grant to Mermaid a put option in respect of its shares in AOD.

On 11 September 2020, Mermaid exercised the put option to sell all of its shares in AOD to Seadrill.

In an update on Monday, Seadrill Limited announced its acquisition of the minority holding of 33.76 per cent of the share capital of AOD.

The consideration for the shares in AOD is $31 million and it is expected that completion of the share transfer and payment of the consideration will occur by the end of September 2020.

The consideration had been mutually agreed between Mermaid and Seadrill taking into consideration, inter alia, two independent valuations of the three jack-up drilling rigs owned by AOD conducted in August 2020 and the net book value of the other net assets of AOD.

Following completion, Seadrill will, through its subsidiary Seadrill Rig Holding Company Limited, hold 100 per cent of the shares in AOD.

Explaining the rationale behind the disposal of shares in AOD, Mermaid said that, in light of the Covid-19 pandemic, the offshore drilling industry has been seriously affected on all fronts, with a drought of new contracts, early termination of some existing drilling contracts and/or renegotiation of existing day rates.

As such, Mermaid’s decision was to choose to exit AOD at this time in order to minimise its exposure to the challenging industry conditions and protect its cash position.