Seadrill prepares offer for Scorpion

Offshore staff

HAMILTON, Bermuda -- Seadrill has acquired further shares in drilling contractor Scorpion, lifting its holding in the company to 40.1%. It now plans to make a cash offer for the remaining shares.

Seadrill sees this as a long-term, strategic investment and will request a meeting of Scorpion shareholders to elect a board reflecting the changing ownership structure. It will also propose that Scorpion enter into an arm's length management contract with Seadrill Management to reduce Scorpion’s rig operating and overhead costs.

Concurrently, Seadrill has entered into an option agreement to buy a high-specification, harsh environment, C170-design jackup under construction at Jurong Shipyard, which should be delivered at the end of 1Q 2011.

Final discussions are under way with a charterer regarding a potential long-term employment of the rig. Once these are completed, Seadrill will exercise its option to purchase the rig.

To finance the Scorpion offer and jackup acquisition, Seadrill will seek to issue up to 12,500,000 shares in a private placement, to be guaranteed by the company’s major shareholder Hemen Holding.

4/12/2010