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Seadrill to Buy Ultradeepwater Rig from Songa for $590 Million

11/16/2012 | 07:34am US/Eastern
   By Ben Fox Rubin 
 

Seadrill Ltd. (SDRL, SDRL.OS) said it agreed to buy the ultradeepwater semisubmersible rig Songa Eclipse from Songa Offshore SE (SONG.OS) for $590 million, giving Seadrill increased exposure to the ultradeepwater market.

The Norwegian oil-services company said it intends to take delivery of the rig in December and expects the acquisition to have an immediate impact on cash flow and financial results.

"This investment is in line with our strategy of building a modern fleet through selective acquisitions and organic growth. The ultradeepwater market is in a strong cycle, something we expect to prevail over the coming years," Fredrik Halvorsen, chief executive of Seadrill Management AS, said.

The rig was delivered from the Jurong Shipyard in Singapore in 2011 and is currently operating for Total S.A. (TOT, FP.FR) off the shores of Angola on a fixed contract ending December 2013. Total has three one-year options to extend the contract. The rig has the same design as four of Seadrill's existing rigs.

The Seadrill, which provides drilling and well services, focuses on deepwater drilling. In August, the company said its second-quarter earnings fell as higher operating expenses masked the company's rise in revenue.

Shares were down 0.9% premarket at $37.17. As of Thursday's close, the stock was up 13% since the start of the year.

Write to Ben Fox Rubin at ben.rubin@dowjones.com

Corrections & Amplifications

This item was corrected at 11:47 a.m. EDT to correctly spell Songa Offshore SE (SONG.OS) in the headline. The original misspelled it as Songo.

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