World’s top shallow water driller raises US$225 million in Oslo IPO

Shelf Drilling is the world’s largest shallow water driller by fleet size. (Reuters pic)

OSLO: Shelf Drilling, a Dubai-based contractor for shallow water rigs, raised about US$225 million (RM900 million) by issuing new shares priced at 65.35 Norwegian kroner (RM32.24) per share, the company said on Friday, the latest drilling firm to list in Oslo to raise capital.

Its initial public offering comes four years after the company scrapped plans to list in London just as the oil market’s downturn started.

Demand for shallow water or jack-up rigs has been steadily growing through 2017 after hitting a bottom at the end of 2016. Brent crude is trading at almost US$74 (RM296) a barrel, up from US$27 (RM108) a barrel in Jan. 2016.

Some 28.1 million shares representing about 25% of Shelf Drilling’s total common shares were issued at a lower end of the indicative price of US$8-9 (RM32-36), implying the market cap of about 7.3 billion kroners (RM3.6 billion), the company added.

In addition, the IPO’s managers have over-allotted 4.2 million shares, or 15% of the newly-issued shares.

Private equity firms such as Lime Rock Partners, Castle Harlan, and CHAMP held more than 60% of the company’s shares as of March, and after the IPO more than 50% of Shelf Drilling shares are expected to be in a free float.

The company said it would use the proceeds to redeem all of its preferred shares and accrued dividends, as well as to buy one drilling rig to add to its fleet of 38 jack-up rigs.

Shelf Drilling, the world’s largest shallow water driller by fleet size, competes with such companies as Ensco, Rowan, Seadrill, and Borr Drilling.

Borr, backed by the world’s largest oil service firm Schlumberger, listed on the Oslo Stock Exchange last year, raising some US$650 million (RM2.6 billion).

Historically, jack-up rigs used to lead the offshore drilling market’s recovery as shallow water projects are less capital intense and take less time to start production than projects in deeper water.

DNB Markets and Clarksons Platou Securities acted as joint bookrunner, while Arctic Securities AS and SpareBank 1 Markets AS are acting as co-managers.

Shelf Drilling shares, which were listed on the Oslo over-the-counter market last year, are expected to start trading on the Oslo Stock Exchange on June 25.