Shelf Drilling expands jackup fleet by acquiring Shelf Drilling North Sea

United Arab Emirates-based jackup rig pure-play Shelf Drilling has announced that it would be merging with Shelf Drilling North Sea (SDNS) and with it enhancing its fleet.

Under the plan of merger, SDNS will become a wholly owned subsidiary of Shelf Drilling. Shareholders of SDNS, who represent more than the necessary voting rights to approve the merger have irrevocably decided to vote in favour of the merger.

This is supposed to be confirmed at a general meeting of SDNS in October 2024. An approval of 75% of the votes cast is required at the SDNS general meeting to approve the merger.

The rationale behind the move is the consolidation of Shelf Drilling’s jackup fleet, solving the funding gap in SDNS, and enabling Shelf Drilling to fully support SDNS going forward.

As part of the merger, the shareholders of SDNS would receive 1.05 merger consideration shares in Shelf Drilling and a cash consideration of NOK 8 ($0.75) per share, in other words, a total consideration of NOK 25.90 per SDNS share. This is a premium of 13% to the market exchange ratio based on the closing prices of shares of Shelf and SDNS on September 13, 2024.

The equity value of Shelf Drilling North Sea is approximately NOK 2.6bn ($245m). The total cash consideration amounts to approximately $30m. It is expected that approximately 42m new shares in Shelf Drilling will be issued as consideration for the merger.

Following the completion of the transaction, existing Shelf holders will own approximately 84% of the company, while SDNS shareholders will own approximately 16% of Shelf Drilling.

“The transaction high-grades the Shelf Drilling fleet with four premium jackups and one ultra harsh jackup and allows for Shelf Drilling to finance the $40m funding need in Shelf Drilling North Sea,” said Greg O’Brien, Shelf Drilling CEO.

Shelf Drilling North Sea owns the Shelf Drilling Perseverance, Shelf Drilling Odyssey, Shelf Drilling Winner, Shelf Drilling Fortress, and Shelf Drilling Barsk which is the world’s largest ultra harsh jackup.

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