Three rigs to change hands as Vantage and ADES take their relationship to the next level
Offshore drilling contractor Vantage Drilling and services provider ADES International are taking their relationship to the next level following an agreement under which Vantage will sell three of its jack-up rigs to ADES for a price tag of $170 million.
The agreement comes less than two months after ADES bought four jack-up rigs from another rig owner, Noble Corporation, paying $292 million.
Vantage currently owns five jack-up rigs and two drillships in its fleet. Since early 2021, the company has also been the manager of two drillships and two semi-submersibles for Aquadrill, formerly known as Seadrill Partners. Both semi-submersibles – West Sirius and West Leo – were sold in October 2021.
The rig owner informed on Tuesday that its board of directors had ratified and approved the entry into a share purchase agreement by one of its directly-held subsidiaries, Vantage Holdings International (VHI), with ADES Arabia, the parent company of ADES International Holding, a PIF portfolio company and an offshore and onshore provider of oil and gas drilling and production services in the Middle East and North Africa.
Under the agreement, Vantage Holdings International agreed to sell to ADES Arabia all of the issued and outstanding equity of its wholly-owned subsidiary, Emerald Driller Company (EDC), for a purchase price of $170 million in cash subject to certain adjustments.
EDC is the owner of the Emerald Driller jack-up rig, which is operating in Qatar, and will own prior to the closing of the sale transaction the Sapphire Driller jack-up rig and the Aquamarine Driller jack-up rig and their respective drilling contracts, which are expected to start operations in Qatar in the first and second quarter of 2022, respectively.
In addition, at the closing of the transaction, subsidiaries of Vantage and ADES agreed to enter into a support services agreement, under which a subsidiary of Vantage will provide support services to ADES in respect of the three rigs operating in Qatar for three years.
Furthermore, Vantage and ADES entered into an agreement to pursue a global strategic alliance leveraging the new support services agreement and their existing joint venture in Egypt. Pursuant to this agreement, the companies agreed to collaborate on exploring future commercial and operational opportunities.
Finally, Vantage revealed that the Tungsten Explorer drillship returned to work for a client offshore Egypt through Vantage’s joint venture with ADES. The term of the drilling contract is 150 days.
Ihab Toma, Vantage’s Chief Executive Officer, commented, “The new transaction will strengthen our balance sheet and will provide Vantage with important financial flexibility. The sale of this business does not end our involvement in Qatar with these rigs as we will continue to support the operations of the three rigs for three years. The support services agreement is a testament to the confidence that ADES places in the Vantage management platform as a springboard for ADES’ international expansion.”
Vantage’s relationship with ADES began in 2017 when they entered into a joint venture capitalizing on Vantage’s fleet and deepwater drilling experience and ADES’s position in Egypt. It was agreed for the JV to operate Vantage’s deepwater drilling units in Egyptian waters on a bareboat charter agreement basis.
Toma continued: “Since that time, ADES has grown substantially, with ADES now employing more than 3,500 personnel, and owning a fleet of 55 rigs. I am delighted that the companies are taking their relationship to the next level, allowing the parties to collaborate across markets beyond Egypt to achieve further efficiencies and to leverage the parties’ operational expertise and financial strength.”
Dr. Mohamed Farouk, Chief Executive Officer of ADES stated, “As we continue to leverage on our strong track record of previous acquisitions and successful integrations, it is worth noting that this transaction comes as a natural expansion in our core GCC market and paves the way for other future opportunities in the region and globally, which comes perfectly in line with the company’s long-term vision of becoming a leading global operator.
“Thanks to the transaction we will be able to add three additional premium jack-up rigs to our fleet, including all the crew and staff which further solidifies and strengthens our existing unique workforce.”