TransOcean To Sell 38 Shallow Water Rigs

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
1.1BB
Description

Purchase of 38 shallow-water rigs for $1.05 billion.

Transocean Ltd. ( NYSE : RIG ) plans to sell 38 shallow water drilling rigs to Shelf Drilling International Holdings Ltd. for $1.05 billion in cash and shares.

The sales price includes approximately $855 million in cash and $195 million in seller financing in the form of preferred 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.

Shelf Drilling is a newly-formed company sponsored equally by Castle Harlan, Inc., CHAMP Private Equity and Lime Rock Partners.

"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."

Related to the Shelf Drilling transactions, Transocean expects its third quarter 2012 results to include a non-cash charge related to impairment of the long-lived assets or goodwill allocable to these assets. As of June 30, 2012, the aggregate carrying amount of the long-lived assets included in the transactions was approximately $1.4 billion. The sales price includes approximately $200 million related to the net current assets associated with the transactions. Transocean's total aggregate consolidated goodwill as of June 30, 2012 was $3.1 billion, a portion of which is expected to be allocated to the assets included in the transactions.