By OGJ editors
HOUSTON, Aug. 12 -- Northern Offshore Ltd. has entered into agreements with affiliates of Transocean Inc. to acquire for $750 million the semisubmersible drilling rigs GSF Arctic II and GSF Arctic IV, currently operating in the UK North Sea under contract to Royal Dutch Shell PLC.
The transactions will complete Transocean's previously reported divestitures to the Office of Fair Trading in the UK related to Transocean's merger with GlobalSantaFe Corp. in November 2007. As part of the approval process, Northern Offshore will operate the rigs in the UK North Sea for at least 3 years from closing.
The rigs are both third-generation Friede & Goldman Enhanced Pacesetter design and can operate in water as deep as 1,200 ft for the GSF Arctic II and 1,500 ft for the GSF Arctic IV. Both rigs can drill to depths of 25,000 ft. The GSF Arctic II is contracted through late 2008 at rates exceeding $400,000/day. The GSF Arctic IV is contracted until September 2010.
Northern Offshore CEO Marion M. Woolie said, "The senior management of Northern Offshore, having been formerly employed by GlobalSantaFe, is well acquainted with the rigs and their crews, which should ensure a safe and smooth integration process."
The sale of the GSF Arctic IV is expected to close late in the third quarter and the GSF Arctic II in the fourth quarter following completion of its existing contract commitment.
Under the agreement, subsidiaries of Northern Offshore will own the rigs. Transocean subsidiaries will provide $745 million in seller financing through Dec. 31, 2010. The rigs will secure the financing. Northern Offshore anticipates refinancing the balance of the seller financing on or before Dec. 31, 2010.
Northern Offshore Ltd.'s current fleet consists of one floating production facility and five drilling units—a drillship, a semisubmersible, and three jack up rigs.
Upon closing of the GSF Arctic IV sale, Transocean will bareboat charter the unit back from the buyer at a rate of $180,000/day for the duration of the rig's contract with Shell. During the bareboat charter term, Transocean will receive the contracted day rate from the customer and will be responsible for the rig's normal operating expenses. A payment from the buyer of $180,000/day will be made and applied to the interest and principal of the seller financing.
