New 'Rig Baby' Takes Shape

“New” owners: the hybrid rig, West Mira, now of Northern Ocean Ltd. (Photo: Northerrn Drilling)
“New” owners: the hybrid rig, West Mira, now of Northern Ocean Ltd. (Photo: Northerrn Drilling)

Norwegian rig and shipping magnate John Fredriksen is pooling harsh environment rig assets and putting his money into new venture, Northern Ocean Ltd., now a business of Seadrill subsidiary, Northern Drilling.

Fredriksen’s investment vehicle, Hemen Holding Ltd., will take up a major stake in a spin-off drilling company that’ll wield the harsh environment semi-submersible drill rigs West Mira and West Bollsta. West Mira has been at work for Wintershall since November 7, while the West Bollsta awaits the start of operations for Lundin in the second quarter of 2020.

The reorganization coincides with a fundraising drive that has quietly brought in $100 million, some $40 million of which is understood to be coming from Fredriksen’s own, Hemen Holding. The spin-off and fundraising yielded an extension of credit from Northern’s banks.

“A spin-off will improve flexibility for the harsh environment rigs and potentially accelerate NOL’s ability to return cash to shareholders,” a note to investors said. They’re being given the option to own shares in the new rig-owning entity.

Northern, however, signaled the move’s substance in an earlier report for shareholders. In September it said “a Seadrill subsidiary” will operate the two rigs. The company also owns two drill ship newbuilds due for delivery in the first half of 2021.

The West Bollsta and West Mira have 10 well contracts each and options with options that could extend into 2022. In all, Northern Drilling had a backlog of $345 million, much of which now appears to belong to new entity Northern Ocean.

Northern Drilling’s parent company, Seadrill, has been in desperate financial straights in recent months, although it now appears to be winning work. Its own backlog stands at over $1.5 billion, with new contracts coming in monthly, although even joint ventures contract in West Africa are not expected to prevent a $90 million fourth-quarter loss for the company.

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