News Column

Shelf Drilling to list shares on London Stock Exchange

June 12, 2014

Babu Das Augustine Deputy Business Editor



Dubai: Shelf Drilling Ltd a Dubai headquartered international shallow water offshore drilling contractor on Thursday said that it is going ahead with an initial public offering (IPO) to institutional investors.

The company has rig operations and offices across four regions Southeast Asia, India, West Africa and the Middle East, North Africa and Mediterranean.

The global offer is expected to be a minimum target offering of $500 million (Dh1.8 million). Out of this, $250 million will be used to repay a portion of its $350 million term loan facility the company has and the remaining proceeds will be used to pay down private equity investors.

Following the IPO, the company's shares will be listed on the main market of the London Stock Exchange.

Shelf Drilling is the world's largest independent leg cantilever (ILC) jackup fleet operator focused solely on shallow water markets. The Group is a provider of offshore contract drilling services in water depths of up to 400 feet.

"Since its creation in 2012, Shelf Drilling has proven the appeal of this offering to customers with strong growth in revenues and the exceptional development of our contract backlog. Becoming a public company will further enable us to invest in the drilling services our customers seek and build sustainable, profitable growth in the world's most prolific hydrocarbon-bearing shallow water basins," David Mullen, CEO, Shelf Drilling.

The Group's fleet consists of 37 ILC jackup rigs, two contracted ILC jackup rigs under construction and one swamp barge. Shallow water accounts for 85 per cent of global offshore production, and 77 per cent of global offshore reserves.

Shelf Drilling Ltd's shares are currently held equally by private equity firms Castle Harlan, CHAMP and Lime Rock, with certain members of the management team and independent non-executive directors holding the balance.

For the year ended December 31, 2013, the Group reported adjusted revenues of $1.2 billion and adjusted EBITDA (earnings before income tax, depreciation and amortisation) of $468 million. As at May 27, 2014, contract backlog stands at $3.4 billion with an average contracted period per rig in excess of two years.

Following the IPO, the company intends to adopt a dividend policy with a pay-out ratio of 40 to 60 per cent of net income, reflecting the group's robust liquidity, moderate leverage, strong contract backlog and forward revenue visibility.

"Shelf Drilling is now a significant force in its markets and presents an investment proposition combining capital growth with an attractive dividend stream," said Sir Richard Olver, Chairman elect, Shelf Drilling.

Morgan Stanley & Co and Goldman Sachs International are joint global coordinators, joint book runners and underwriters, HSBC Bank plc and RBC Europe Limited (RBC Capital Markets) are joint book runners and underwriters, Tudor, Pickering, Holt & Co Securities Inc (acting through its affiliate Tudor, Pickering, Holt & Co International, LLP) is co-lead manager and underwriter and Liberum Capital Limited is co-lead manager.

Full details of the Global Offer will be available in the prospectus that is expected to be published in the coming weeks.


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Source: Gulf News (United Arab Emirates)


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