Standard Drilling buys Clearwater rigs

Oslo-listed Standard Drilling is pursuing an aggressive fleet expansion plan by offering to buy out two jack-up drilling units being built for New York-based Clearwater Capital Partners and declaring options for four more rigs with Singapore's Keppel Fels.

Tan Hwee Hwee 11 April 2011 01:01 GMT

Standard Drilling has offered $8.5 million in cash and $126 million worth of shares equivalent to 30% of its shareholding to Clearwater for the pair of KFels Mod V B Class jack-ups plus an option for two similar rigs.

Standard Drilling also intends to exercise an option for two rigs attached to its November newbuild contract with Keppel Fels for a pair of jack-up rigs.

All four options have been declared at a total value of $768 million or $192 million per rig.

The transaction is subject to shareholders' approval and will be financed by $330 million of private share placement.

The Clearwater acquisition is expected to be complete by early May and a newbuild contract for the additional rigs will be signed by mid-May, Standard Drilling said in a statement.

The entire transaction when complete, will bring Standard Drilling's fleet up to seven newbuild jack-up rigs, due for delivery from July 2012 through May 2014.

The delivery schedules and the 20:80 payment terms of the newbuild contracts imply the merged fleet will be an attractive acquisition target for any "US driller in a hurry to replace its [older] fleet", according to a Pareto Securities equity research note.

Pareto Securities is the joint lead manager in Standard Drilling's $330 million private equity placement.