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4-Traders Homepage  >  Equities  >  SINGAPORE EXCHANGE  >  Keppel Corporation Limited    KPLM   SG1U68934629

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Keppel : Newcomer Borr scoops up Transocean rigs for $1.4 billion as dealmaking heats up

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03/20/2017 | 04:28pm CEST

Borr Drilling , founded by former executives of financially troubled Seadrill, has snapped up Transocean's  (>> Transocean LTD) fleet of shallow-water drilling rigs for $1.35 billion (1.09 billion pounds).

Borr Drilling <BORR.NFF>, founded by former executives of financially troubled Seadrill<SDRL.OL>, has snapped up Transocean's <RIGN.S> (>> Transocean LTD) fleet of shallow-water drilling rigs for $1.35 billion (1.09 billion pounds).

The rig market deal is Borr's biggest since it was set up last year by Tor Olav Troeim and other executives who had left Seadrill, once the jewel in the crown of Norwegian-born shipping tycoon John Fredriksen but now battling with $14 billion in debt and liabilities.

After years at Fredriksen's side, Troeim split with him in 2014.

Since then Troeim has re-established himself as an independent player in the global shipping market with a high profile and a reputation for successful capital raising.

Transocean, executives at Borr Drilling and Troeim were not immediately available for comment.

Fredriksen's private investment vehicle Seatankers bought the new West Mira rig from the Hyundai Samho Heavy Industries <009540.S> shipyard for an undisclosed sum just a week ago.

As the price of crude has fallen by more than 50 percent since 2014, oil firms have cut back on rig hires, leaving many vessels idle and prompting owners to restructure operations to preserve cash.

Transocean shares were down 4.8 percent at 1403 GMT, lagging a European oil and gas index <.SXEP> down 1 percent.

Borr, founded with the aim of picking up cheap assets as rig firms sell during the industry downturn, said it would issue $800 million in new shares to help finance the purchase of the 15 rigs.

The deal comprises 10 high-specification jack-up rigs and five more that are under construction, Borr said in a statement. Swiss-based Transocean will retain a fleet of about 50 larger rigs used for exploration in deeper waters.

Borr, which currently owns just two rigs, will pay $90 million on average for each of the 15 Transocean rigs.

"That's half the construction cost, so it's a pretty attractive deal," said Carnegie brokerage analyst Frederik Lunde.

Borr, which is listed on Oslo's over-the-counter board, said a group of investors had agreed to the $800 million share issue to help fund the deal. The new shares will be sold at $3.5 each, a discount to Borr's current share price of 35 Norwegian crowns ($4).

Boor says it expects the acquisition to be completed by the end of May.

In addition to the 15 shallow-water rigs, Transocean owns 30 ultra-deepwater units and has four more under construction, as well as seven harsh-environment rigs, three deepwater rigs and six mid-water units, according to its website. Keppel Corporation (>> Keppel Corporation Limited), which is building the five rigs that are under construction, said in a separate statement it had agreed to transfer the ownership to Borr from Transocean.

Transocean had originally agreed to pay $219 million for each of the five rigs, Keppel said, adding that this would be only slightly reduced, to $216 million per unit under the amended deal.

(Additional reporting by Nerijus Adomaitis and Ole Petter Skonnord; Writing by Gwladys Fouche; Editing by Susan Fenton/Ruth Pitchford)

By Terje Solsvik and Jonathan Saul

Stocks treated in this article : Transocean LTD, Keppel Corporation Limited
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Financials ( SGD)
Sales 2017 6 502 M
EBIT 2017 869 M
Net income 2017 848 M
Debt 2017 5 947 M
Yield 2017 3,52%
P/E ratio 2017 13,00
P/E ratio 2018 12,10
EV / Sales 2017 2,65x
EV / Sales 2018 2,45x
Capitalization 11 307 M
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Mean consensus HOLD
Number of Analysts 17
Average target price 6,83  SGD
Spread / Average Target 9,7%
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Chin Hua Loh Chief Executive Officer & Executive Director
Boon Yang Lee Non-Executive Chairman
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Jacob Tong General Manager-Group Information Systems
Heng Tan Tow Non-Independent Non-Executive Director
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