Norwegian offshore drilling company Odfjell Drilling said Monday it was contemplating spinning off its Well Services and Energy segments into a newly established company, Odfjell Technology. The plan is also to list the shares in Odfjell Technology on the Oslo Stock Exchange.
Odfjell Drilling, is best known for its yellow-colored semi-submersible offshore drilling rigs, said the spin-off would enable all parts of the business to "think beyond their existing core activities, capabilities, markets, and competitive environment to evolve and strengthen their position to meet the needs of customers in the energy transition phase and towards the anticipated increasing activity levels in the global oil & gas industry."
The company said that during the 2021 downturn in oil & gas, it had, with Odfjell Technology's component parts delivered resilient operational and financial performance.
"Combined with the favorable underlying drivers and market outlook for both companies, the Spin-Off is part of the company’s strategy to create further shareholder value," Odfjell Drilling said.
"With an inherent commitment in the company to safeguard the environment and pursue adjacent opportunities within energy transition, the Spin-Off will enable increased focus in OTL [Odfjell Technology] on innovation and development of new services, technologies, and products required in the energy transition, offering reduced emissions for customers through e.g., increased drilling efficiencies and by applying new technology," Odfjell Drilling said.
Odfjell Drilling said that, in addition, Odfjell Technology would seek to further expand into green ventures, such as the current investment in Odfjell Oceanwind.
The Spin-Off businesses comprise the company’s current Well Services and Energy segments. The Energy segment consists of platform drilling and engineering & projects, as well as a 21% ownership in Odfjell Oceanwind, a company focused on developing mobile offshore wind units providing flexible energy solutions to offshore infrastructure. Prior to executing the Spin-Off, an internal reorganization will be carried out and the relevant Well Services and Energy companies will become subsidiaries of Odfjell Technology.
"OTL will seek to leverage its industrial heritage, specialist competence and long relationships from the offshore oil & gas industry to serve new energy markets in marine environment with mission-critical equipment and services," Odfjell Drilling said.
Subject to completion of the Spin Off, the management of Odfjell Technology is expected to consist of Simen Lieungh (CEO), Jone Torstensen (CFO), George Taggart (EVP Well Services) and Elisabeth Haram (EVP Drilling Operations and Engineering), and the initial board of directors is expected to consist of Helene Odfjell, Alasdair Shiach, Susanne Munch Thore and one additional director to be announced at a later stage.
After the spin-off, Odfjell Drilling will continue to provide offshore drilling services in the harsh environment segment, but will also collaborate with Odfjell Technology through strategic frame agreements to provide integrated services.
Odfjell Drilling has four fully-owned high specification harsh environment semi-submersible drilling units, Deepsea Atlantic, Deepsea Stavanger, Deepsea Aberdeen, and Deepsea Nordkapp, as well as three harsh environment semi-submersible drilling units under marketing and management services, namely Deepsea Yantai, West Mira, and West Bollsta.
Bond Issue
In connection with the Spin-Off, Odfjell Technology intends to issue 4-year, senior secured bonds through a private placement. The net proceeds from the Bond Issue will, together with a new USD 25 million super senior revolving credit facility, be used to carry out the internal reorganization and to repay the existing USD 150 million credit facility related to the Well Services and Energy segments.