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April 13, 2010

Seadrill makes offer for Scorpion Offshore

John Fredriksen's Seadrill Limited is making a cash offer for the remaining shares of Scorpion Offshore Limited.

Yesterday Seadrill acquired 1.3 million Scorpion shares through market transactions at a price of NOK 36.00 per share. That took its stake to 40.1 percent of Scorpion's issued shares, triggering an obligation to make a mandatory cash offer for the remaining shares or to reduce its holding below the 40 percent threshold within four weeks.

Seadrill has decided to make the cash offer and says it is prepared, subsequent to the offer, to be owner of anything between 40.1 and 100 percent of Scorpion.

Seadrill says it views the holding in Scorpion as a long term, strategic investment and will, as a consequence of the increase of its shareholding, request a shareholder meeting in Scorpion for the purpose of electing a board that, to a larger extent than today, reflects the ownership structure of Scorpion.

Seadrill will, in addition, put forward a proposal to Scorpion to enter into an arm's length management contract with Seadrill Management AS with the target of reducing rig operating and overhead costs in Scorpion.

Seadrill also announced it had entered into an option agreement with Jurong Shipyard to buy a high specification, harsh environment, jack-up rig of the CJ70 design that is under construction at the yard and is expected to be delivered at the end of the first quarter of 2011. Seadrill is currently in final discussions with a charterer regarding a potential long term employment of the rig. In the event these discussions are successfully completed, Seadrill will exercise itd option and purchase the rig.

To finance the Scorpion offer and the potential acquisition of the CJ70 design jack-up rig, Seadrill Limited today completed a private placement of a total of 12.5 million shares that raised gross proceeds of NOK 1,894 million (approximately US$ 322 million).

Seadrill says its objective is to continue to grow Seadrill through the acquisition of modern, high specification, drilling units and thus further increase its capacity for long-term regular quarterly dividend payments.

The common shares of Seadrill will start trading on the New York Stock Exchange on Thursday April 15, 2010.

Meantime Scorpion Offshore Ltd. said it has engaged Simmons & Company International and is in the process of engaging additional, international financial and other advisors to assist it in evaluating Seadrill's mandatory cash offer as well as strategic alternatives to maximize value for all shareholders of Scorpion.


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