Seadrill sells its Asian rig unit to SapuraKencana for $2.9bn

 
City A.M. Reporter
SEADRILL, the world’s biggest offshore rig group by market value, is to sell part of its Asian business to Malaysia’s SapuraKencana in a deal worth $2.9bn (£1.8bn), freeing up cash to expand in high-growth deep-water drilling.

The company, the crown jewel in billionaire John Fredriksen’s empire, is selling its tender rigs division – rigs for drilling in waters up to 6,500 feet – to the Malaysian firm, which will get an established business with expertise to help its Asian expansion.

Fredriksen, known as Big Wolf for his bold business deals, has been the dominant player in the tender rig business and analysts said he is now cashing in at the top, before competition begins to eat into his market share.

He said Seadrill would use the proceeds from the deal to expand its deep-water fleet and also invest in the resurgent jack-up drilling sector – shallow-water rigs with legs that can be jacked up and down.

The $2.9bn price tag on Seadrill’s deal includes up to $1.4bn in cash, $363m in capital expenditure, around $800m in debt plus up to $350m worth of new shares in SapuraKencana. Seadrill’s stake in SapuraKencana will rise to 12.5 per cent from 6.4 percent.