North Atlantic Drilling Ltd (NADL) and Seadrill have executed an investment and cooperation agreement with Rosneft to pursue growth opportunities offshore and onshore in the Russian market through at least 2022. As part of these proposed opportunities, NADL will enter the onshore drilling market in Russia and enter into contracts for multiple offshore assets. In addition, Rosneft will acquire a significant equity stake in NADL.
NADL has already been contracted to drill the first two wells in the Kara Sea, as part of Rosneft and ExxonMobil’s joint venture during 2014 and 2015.
As part of the agreement, several long-term contracts for NADL’s near-term availability are expected to be signed, as well as a commitment for future contracts and newbuild projects. The agreement envisions initial employment of up to nine offshore rigs to Rosneft, with a total commitment of 35 rig years.
Closing of the transaction is expected during the second half of 2014, subject to customary due diligence, negotiation of detailed transaction terms and respective board approvals. The company’s operations in Stavanger will continue and will focus on the current operations and future growth. The strategic partnership is likely to entail the establishment of other regional offices to serve local growth. Overall activity levels are expected to increase significantly and provide employees with attractive opportunities, according to Seadrill.
Seadrill, after the initial transaction, will remain the largest shareholder in NADL. Alf Ragnar Lovdal, NADL CEO, said, “We have sought to access the growth opportunity represented by the Russian market for several years, and we are very pleased to have reached an agreement with Rosneft for this landmark transaction. The Russian market is one of the most attractive opportunities in the world and offers tremendous growth potential for North Atlantic Drilling. By partnering best-in-class drilling with a supermajor who produces over 5 million barrels per day, we, after closing of this transaction, will have created a powerful force in the Russian market and for Arctic regions on a global basis. We look forward to closing this important transaction and working with Rosneft for many years to come”
NADL is an offshore harsh-environment drilling company with focus on the North Atlantic basin. The company has nine drilling units in the fleet, including five semisubmersibles, a drillship and three jackups. Seadrill currently owns 70% of the outstanding shares.