Seadrill has taken control of Asia Offshore Drilling after buying out the stake controlled by Thai-backed Mermaid Maritime.
The John Fredriksen-backed drilling company confirmed it had paid $31m for the outstanding 33.76% of Asia Offshore it did not already own.
Seadrill expects to complete the share transfer and payment of the funds by the end of September, according to a regulatory filing.
Mermaid Maritime, which is part of the Thoresen Thai Agencies' pizza to dry bulk shipping empire, said it had exercised a put option - about three weeks before it expires - to sell all its shares in AOD to Seadrill.
The company said the disposal of the shares was "in the best interests of the company" as it had no control over the business and operations of AOD due to it being a minority shareholder.
"The company’s core business is the provision of subsea and related services to the offshore oil and gas industry and the investment in AOD, which is in the offshore drilling services business, is a non-core asset of the company," Mermaid Maritime said.
"Due to challenging market conditions, the company had already divested its own tender assist drilling rig business and disposed of its two remaining tender rigs in 2018."
Disposal in best interests of the company
Mermaid Maritime said that in light of the Covid-19 pandemic, the offshore drilling industry has been seriously affected on all fronts, with a "drought of new contracts, early termination of some existing drilling contracts and/or renegotiation of existing day rates".
As such, it said its decision was to choose to exit AOD in order to minimise its exposure to the challenging industry conditions and protect its cash position.
"The disposal of the shares will also provide additional working capital, maintain liquidity and balance sheet strength during these market challenging times, and enable the company to focus on growing its core and related businesses with the target to turn around a profit," Mermaid Maritime added.
AOD was established by Mermaid Maritime in late 2010 when two MOD-V B Class jack-up rigs where contracted at Singapore’s Keppel FELS.
Seadrill initially bought a one-third stake in the company in July 2011 for $54m before increasing it to 66% in April 2013.
Asia Offshore’s three-strong jack-up fleet is on charter to Saudi Aramco with the charters due to roll-off in July 2022, January 2023 and April 2024.
The first rig, AOD I, is earning an undisclosed discounted day-rate for 2020, similarly the AOD III is earning an undisclosed discounted day-rate for 2020 and 2021.
The third rig, AOD II, was suspended from operations in June 2020 for a period of up to 12 months, but its contract has been extended for the suspension period.
The suspension is said to be due to the impact on the customer’s drilling program from adverse crude oil price movements affecting the oil and gas industry and offshore drilling services sector.
According to Mermaid Maritime’s most recent results presentation, Asia Offshore has an senior secured credit facility with an outstanding balance of $210m.
