Seadrill, North Atlantic Drilling Announce Strategic Partnership

August 15, 2013

North Atlantic Drilling and Seadrill announced in their first quarter 2013 reports that the companies were actively engaged in discussions with potential strategic partners in order to strengthen NADL's position in harsh environment areas.

The basis for the establishment of NADL in 2011 was to carve out a premium specialist operator with a superior safety standard in harsh environment areas and to use this as a platform to grow the business substantially. NADL builds on a 40-year history of drilling operations and a best-in-class track record in challenging areas.

The recent discoveries and activities in harsh environment areas like Norway, Northern part of the UK, North Canada and Alaska, Greenland, Arctic and Northern and Far East part of Russia strongly confirm this growth opportunity.

The supply and demand balance for these markets looks tight considering that very few suitable new units are to be delivered in the next years. It is likely that this new capacity is insufficient to meet what is expected to be a very high growth in demand for drilling activities.

The boards of Seadrill and NADL have in this respect focused on further strengthening  the foothold for future operations in new offshore frontiers, including the emerging Arctic and sub-Arctic harsh environment areas in the Northern hemisphere.  Particular focus has been placed on pursuing business in the promising Russian offshore sector.

NADL and Seadrill are pleased to announce that a preliminary agreement to create a strategic partnership with a strong industrial player has been reached to foster growth of the company's harsh environment business. The potential strategic partner has a strong foothold in the Russian market, vast experience and competence in Arctic operations, including unique expertise in ice management. The partnership brings together organisations with complimentary skillsets well positioned to capture growth, building on their respective experience and know-how and creating new industrial synergies.

The potential strategic partner will initially purchase a substantial minority stake in NADL from Seadrill priced around current market levels. Further the partner will be granted an option to acquire a majority stake at a later stage at a premium to the current market levels. Signing and closing of the transaction is expected within the third quarter of 2013. Both Seadrill and the potential strategic partner strongly support an immediate US-listing of NADL post closing of the first part of the transaction.

Source: North Atlantic Drilling, 2013.