ADES signs PSA for three operational jackups in the Arabian Gulf

12/20/2017

LONDON and DUBAI -- ADES International Holding Ltd., the London-listed company providing offshore and onshore oil and gas drilling and production services in the Middle East and Africa through its subsidiaries, has signed a Purchase and Sale Agreement (PSA) with Nabors Drilling International II Limited, a subsidiary of Nabors Industries Ltd (Nabors). to acquire three operating offshore jackup rigs currently contracted by a major national oil company in the Arabian Gulf for a total purchase price of $83 million, payable in a combination of cash and ADES shares (the transaction).

The PSA also provides for the existing drilling contracts associated with the rigs to be transferred to ADES.

Transaction highlights

  • Consideration for the Transaction will include a cash payment equivalent to 75% of the total Transaction value and the remaining 25% will be paid in the form of newly issued shares of ADES (―Consideration Shares).
  • The total number of Consideration Shares was calculated using the closing mid-market price of ADES shares on Dec. 18, 2017, being the business day prior to the Transaction signing date.
  • Consideration Shares issued to Nabors as part of the transaction will be subject to a three-month lock-up period.
  • In total, the acquisition is expected to add approximately $60 million annually to ADES’ Group revenue, while maintaining margins and thereby further enhancing Group earnings.
  • The Transaction is expected to close in first-quarter 2018, subject to the fulfillment of the conditions precedent as agreed in the PSA, including the renewal of current drilling multi-year contract terms.

About the acquired rigs

  • The three ultra-shallow drilling rigs have each been in continuous service for more than 10 years, making them among the most in-demand assets in the region.
  • The rigs have recently been refurbished, with five-year inspections already implemented on two rigs and the third is due in 2018.
  • Once completed, the Transaction will bring the number of the Group’s rigs under contract in the Arabian Gulf to six, further cementing ADES’ position as a major low-cost operator of offshore drilling rigs in the region.
  • ADES and Nabors will collaborate to advance the integration and automation technology initiatives of Nabors Drilling Solutions and Canrig, including automating rig surface and downhole activities, within the offshore drilling space in the Middle East and beyond. Specifically, the companies will set up a high level technical, operational and commercial taskforce with the objective of introducing the Nabors value proposition within the region utilizing ADES rigs.

ADES shall, in due course, invite its Shareholders to vote on a special resolution for the issuance and allotment of shares to be issued to Nabors in connection with this Transaction.

ADES is also finalizing a separate PSA with Nabors to acquire two stacked offshore jack-up rigs in a similar cash and shares deal which, in line with the Company’s strategy of minimizing risk, will be contingent on the awarding of specified drilling contracts. Progress on these negotiations will be announced in due course.

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