Standard Drilling Sells Under-Construction Jack-Up Rig
Offshore Driller 1 Ltd, a wholly owned subsidiary of SD Standard Drilling Plc (“Standard Drilling”), has entered into a final Sale and Purchase Agreement (SPA) for the sale of one rig (hull no B337) under construction for a total consideration of USD 222.5m.
The buyer is CP Latina, a company incorporated in Mexico. Completion of the transaction will take place on 15 January 2013 and is subject to acceptance from the yard of novation of the construction contract. A non-refundable 1st instalment of USD 10m has already been paid into Offshore Driller 1 Ltd’s account. The sale of the rig will give an estimated net profit of USD 25m.
The book equity of Standard Drilling will be approximately USD 430m after the transaction has been completed, or USD 1.64 per share. Net cash proceed from the sale of B337 is USD 67.9m. Following the effectiveness of the SPA with CP Latina, an Option Agreement has also been entered into whereby CP Latina has a first right of refusal to purchase a second rig under construction (hull no B338 or alternatively B339).
The Option Agreement expires 15 January 2013 and the agreed price, if the first right of refusal or option is exercised, is USD 215m for B338 or, alternatively, USD 214m for B339. The sale of B337 will reduce the future capital investments (obligations vs Keppel FELS) by USD 153.6m.
The total remaining commitment vs the yard, Keppel FELS, will correspondingly be reduced from USD 614.4m to USD 460.8m. After the transaction, Standard Drilling will have a strong net cash position. The Board of Directors in Standard Drilling is pleased with the sale of the rig and finds the net funding need for the remaining 3 rigs comfortable. Following sale of B337, Standard Drilling will have 3 identical MOD B V drilling rigs under construction at Keppel FELS in Singapore with contractual delivery in November and December 2013 respectively and in May 2014. The construction is progressing well for all 3 units with no delays.
Press Release, November 27, 2012