SEADRILL ACQUIRES AQUADRILL IN ALL-STOCK TRANSACTION TO CREATE LEADING OFFSHORE DRILLING COMPANY

(WO) — Seadrill Limited and Aquadrill LLC announced on Dec. 23 that they have entered into a definitive merger agreement under which Seadrill will acquire Aquadrill in an all-stock transaction. Upon completion of the transaction, Seadrill shareholders and Aquadrill unitholders will own 62% and 38%, respectively, of the outstanding common shares.

The transaction values Aquadrill at an implied equity value of approximately $958 million, based on Seadrill’s 30-day volume-weighted average share price on the NYSE of $31.25 as of Dec. 22, 2022.

The Company will remain named Seadrill Limited and will continue to be domiciled in Hamilton, Bermuda. Julie Robertson and Simon Johnson will continue in their respective roles as Chair of the Board of Directors, and President and Chief Executive Officer.

The combination of Seadrill and Aquadrill presents a compelling strategic rationale for all stakeholders.

Creation of a leading offshore driller with best-in-class fleet

The new merger will be in a strong position to serve a broader range of customers, with one of the youngest and most technologically advanced fleets in the industry, and a combined backlog of $2.8 billion. They will own 12 floaters (including seven 7th-generation drillships), three harsh environment rigs, four benign jack-ups, and three tender-assisted rigs.

Additionally, seven rigs will be managed under a variety of strategic partnerships.

Increased exposure and upside to the improving market

The Company will have a diversified portfolio of contract coverage, with an additional active fleet capacity to deploy in a rising market environment across critical basins in the Golden Triangle.

Significant synergy potential

The Company will be uniquely positioned to rapidly integrate and realize identified and achievable synergies of at least $70 million annually on a run-rate basis. All synergies are expected to be fully realized within two years of closing the transaction.

Synergies are expected to be generated through a combination of management fee optimization, G&A and overhead cost savings, logistics, supply chain and inventory efficiencies and capital expenditure savings.

Strong cash flow generation and further strengthened balance sheet

The Company should benefit from an enhanced cash flow profile and a strengthened balance sheet, with significant credit and liquidity improvement, and with access to a potentially lower cost of capital.

Transaction Overview

Aquadrill unitholders and equity award holders will in aggregate receive 30,645,160 common shares of Seadrill, representing 38% ownership in the Company. This is approximately 36.6% on a fully diluted basis. Following the completion of the transaction, Aquadrill will become a wholly-owned subsidiary of Seadrill.

The transaction has been approved by the Boards of Directors of both Seadrill and Aquadrill. The required approval of Aquadrill’s unitholders has also been obtained. The transaction does not require Seadrill shareholder approval.