Rosneft to take Seadrill unit stake

May 26, 2014

Rosneft is to take a "significant equity stake" in drilling firm North Atlantic Drilling (NADL) as part of an agreement between NADL and its majority owner Seadrill, as the Russian firm looks to ramp up its offshore exploration efforts.  

The agreement, announced by NADL and Rosneft, during the St Petersburg International Economic Forum, sees Rosneft using up to nine offshore rigs, with a total commitment of 35 rig years through 2022. 

A string of other announcements were made by Rosneft at the event, including co-operation agreements with SOCAR and ONGC. See below

NADL, which was created by Seadrill earlier this year and operates nine harsh environment drilling rigs, with a further rig on order, already has its West Alpha semisubmersble (pictured) contracted to drill the first two wells in the Kara Sea, as part of Rosneft and Exxon's joint venture during 2014-2015. 

As well as a number of long term contracts for NADL's near-term availability, the agreement is likely to lead to future newbuild projects, said Seadrill. 

The deal could see Rosneft, over time, go on to take a stake of up to 50% in Norway-based Seadrill, currently 24.54% owned by Norwegian-born businessman John Fredriksen, according to Reuters. 

Alf Ragnar Lovdal, CEO of NADL says: "The Russian market is one of the most attractive opportunities in the world and offers tremendous growth potential for North Atlantic Drilling.  By partnering best in class drilling with a supermajor who produces over 5MM bbl/d, we, after closing of this transaction, will have created a powerful force in the Russian market and for Arctic regions on a global basis. We look forward to closing this important transaction and working with Rosneft for many years to come."

Closing of the agreement, described as an "investment and co-operation agreement", is expected during 2H 2014, subject to customary due diligence, negotiation of detailed transaction terms, and respective board approvals.

NADL's operations in Stavanger will continue and will focus on the current operations and future growth. Seadrill will remain the largest shareholder in NADL. 

NADL is an offshore harsh environment drilling company with focus on the North Atlantic basin. The company has nine drilling units in the fleet, including five semi-submersibles, a drillship, and three jackup rigs. 

Seadrill Limited currently owns 70% of the outstanding shares and the company is listed on the NYSE and Norwegian OTC with a market capitalization of about US$2.1 billion.

Other agreements 

Rosneft and General Electric (GE) signed a technology cooperation agreement, which aims to set up a Joint Advanced Research and Technology Center in Moscow and lays the grounds for further individial targeted research and development agreements. 

Rosneft announced a joint venture agreement with SOCAR, Azerbaijan's state-owned oil company, for oil and gas projects in areas including Russia and Azerbaijan, including the Russian sheld of the Caspian Sea, and other waters, as well as new markets. 

Rosneft and ONGC Videsh signed a memorandum of understanding for oil and gas exploration on the Russian continental shelf, specifically, Russia's offshore Arctic. ONGC Videsh is a subsidiary of Oil and Natural Gas Corporation, India's national oil company. ONGC Videsh and Rosneft are partners on the Sakhalin-I oil and gas project in Russia.

Rosneft signed an agreement with the Association of Polar Explorers on cooperation in exploration and development of the Russian Arctic Shelf. The agreement includes modernizing the regulatory framework in the region of arctic zone development, promoting the development of polar sciences, participation in a program aimed at environmental protection in polar regions, collecting, analysing and sharing data on the study and development of the Arctic, designing and implementing new equipment and technologies, and organizing expeditions.

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