Transocean to sell off shallow water rigs

SEPTEMBER 10, 2012—Increasing its focus on deepwater, giant offshore drilling contractor Transocean Ltd. has inked a definitive agreements to sell 38 shallow water drilling rigs to a newly formed company Shelf Drilling International Holdings, Ltd., based in Dubai, for $855 million in cash and another $195 million in seller financing. 

Shelf Drilling is a newly formed company sponsored equally by Castle Harlan, Inc., CHAMP Private Equity and Lime Rock Partners. Shelf Drilling will focus on shallow water drilling activity in the Middle East, Africa and Asia. Nineteen the rigs to be acquired by Shelf Drilling are in Asia.

The seller financing will be in the form of preference shares issued by an affiliate of Shelf Drilling. As a component of the agreement, Transocean will provide various transition support services to Shelf Drilling for a period subsequent to the closing of the transactions. The transactions are expected to close in the fourth quarter of 2012, subject to certain conditions.

“This agreement marks an important milestone in our asset strategy to increase our focus on high-specification floaters and jackups, improving our long-term competitiveness,” said Steven L. Newman, President and Chief Executive Officer of Transocean Ltd.

David Mullen, President and Chief Executive Officer of Shelf Drilling, added, “This is an exciting opportunity with great potential. Our strategy will be to maintain an exclusive focus on shallow water drilling, leveraging decades of complementary industry experience of management, three leading investment firms, and our employees, to provide best in class drilling operations for our customers.”

As of today, Transocean, which has corporate offices in Zug, Switzerland, Houston, TX, and the Cayman Islands, owns or has partial ownership interests in, and operates a fleet of, 115 mobile offshore drilling units. These consist of 48 Ultra-Deepwater, Deepwater and Harsh-Environment drilling rigs, 25 Midwater Floaters, nine High-Specification Jackups, 32 Standard Jackups and one swamp barge. Transocean also has two Ultra-Deepwater Drillships and three High-Specification Jackups under construction.