November 2, 2010
Gulf jack-up operator eyes strategic alternatives
BOEMRE Director Michael R. Bromwich may be in denial about its existence, but the de facto moratorium on issuance of new shallow water drilling permits looks to be real enough to be forcing Houston headquartered Seahawk Drilling, Inc. (Nasdaq:HAWK) to seek a buyer. The company,which owns and operates a fleet of 20 jackup rigs that are located in the Gulf of Mexico said today that its Board of Directors "has initiated a process to explore and consider possible strategic alternatives for enhancing shareholder value."
The Seahawk announcement says "alternatives could include, but are not limited to, transactions involving a sale of assets, a recapitalization, or a sale or merger of Seahawk."
Seahawk says its liquidity and revenue generation have been adversely affected by "the dramatic slow-down in the issuing of shallow water drilling permits in the U.S. Gulf of Mexico following the Macondo well blowout," continued low prices for natural gas, the general economic slowdown and other factors. However, the Board of Directors and management believe that Seahawk's core strategy is sound and that there are opportunities for international expansion and domestic growth.
The Board of Directors and its Finance Committee, which is comprised solely of independent directors, are overseeing this process and Simmons & Company International has been retained as financial advisor to assist and advise Seahawk.
Seahawk President and Chief Executive Officer, Randall D. Stilley, said: "We have engaged Simmons to explore strategic alternatives after careful reflection and consideration by the Board of Directors, the Finance Committee, and management of the difference between Seahawk's internal valuation of its assets and equity value and the current market value of Seahawk as indicated by our stock price, as well as our short-term and long-term liquidity needs. We are undertaking this evaluation to best realize the potential of our assets and maximize value to our shareholders."
Seahawk has not set a definitive timetable for completion of its evaluation and says there can be no assurance that this process will lead to the approval or completion of any transaction. Seahawk says it does not intend to disclose developments regarding this process unless and until its Board of Directors approves a specific transaction or otherwise concludes its review of strategic alternatives.