Seadrill Limited Announces Agreement to Acquire Aquadrill LLC in All-Stock Transaction

23 Dec 2022 01:03 CET

Hamilton, Bermuda, December 22, 2022 – Seadrill Limited (NYSE & OSE: SDRL)
(“Seadrill”) and Aquadrill LLC (“Aquadrill”; and together with Seadrill, the
“Company”) today announced 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 in the Company. The transaction values Aquadrill at an implied
equity value of approximately US$958 million, based on Seadrill’s 30-day
volume-weighted average share price on the NYSE of US$31.25 as of 22 December
2022.

The combination creates an industry-leading offshore drilling company, with a
modern and high specification fleet and a streamlined cost structure. The
Company will be well-placed to realize estimated annual run rate synergies of at
least US$70 million. The Company will also be well-positioned for further growth
given its stronger credit and liquidity profile, and to provide attractive cash
flows.

Commenting on the transaction, Simon Johnson, Seadrill’s President and Chief
Executive Officer, said, “At Seadrill we seek to deliver safe and effective
operations as the bedrock for generating returns for our shareholders. Seadrill
and Aquadrill have a long and rich strategic and operational management history.
Our shared heritage will promote efficient integration of the two companies. I
look forward to welcoming the Aquadrill fleet back into the Seadrill family.”
Steven Newman, Aquadrill’s Chief Executive Officer, said, “We believe this
combination will create the most value for our shareholders and will create an
excellent platform for high quality service delivery to our customers.”

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.

Strategic Rationale

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 Company
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 US$2.8 billion. The Company 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 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
US$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:

1. management fee optimization;
2. G&A and overhead cost savings;
3. logistics, supply chain and inventory efficiencies; and
4. 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,
or approximately 36.6% on a fully-diluted basis. Following completion of the
transaction, Aquadrill will become a wholly owned subsidiary of Seadrill.

Certain of Aquadrill’s unitholders, which collectively own more than 75% of
Aquadrill’s common units, have agreed to approve the transaction. No further
vote of Aquadrill unitholders is required in respect to the transaction. The
transaction does not require Seadrill shareholder approval. The transaction is,
however, subject to applicable regulatory approvals and other customary
conditions, and is expected to close in mid 2023.

Governance and Leadership

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.

Company Pro Forma Financial Information

As of November 30, 2022, Seadrill and Aquadrill had a combined cash balance of
approximately US$628 million, including approximately US$133 million of
restricted cash, and a combined debt balance of approximately US$521 million.

Other

Seadrill is currently traded on the New York Stock Exchange and the main list of
the Oslo Stock Exchange.

Advisors

Citi is serving as sole financial advisor and Baker Botts L.L.P. and
Advokatfirmaet Thommessen AS are serving as legal counsel to Seadrill. Intrepid
Partners, LLC is serving as sole financial advisor and Akin Gump Strauss Hauer &
Feld LLP and Advokatfirmaet Schjødt AS are serving as legal counsel to
Aquadrill.

Acquisition Announcement Video

A message from Seadrill and Aquadrill's respective management teams can be found
at www.seadrill.com/investors

Seadrill Contact Information

David Warwick
Director of Investor Relations
T: +971 58 687 4132
E: David.Warwick@Seadrill.com

Sara Dunne
Director of Communications
T: +1 281 630 7064
E: Sara.Dunne@Seadrill.com

Aquadrill Contact Information

E: aquadrill@aquadrilloffshore.com

This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to disclosure requirements pursuant to
section 5-12 of the Norwegian Securities Trading Act. This stock exchange
announcement was published by Seadrill, at the date and time set out in this
announcement.

About Seadrill

Seadrill is a leading offshore drilling contractor utilizing advanced technology
to unlock oil and gas resources for clients across harsh and benign locations
around the globe. Seadrill’s high-quality, technologically-advanced fleet spans
all asset classes allowing its experienced crews to conduct operations from
shallow to ultra-deep-water environments.

About Aquadrill

Aquadrill is a limited liability company that owns eight offshore drilling
units. Aquadrill’s fleet consists of four ultra-deepwater drillships, one
ultra-deepwater harsh environment semi-submersible and three tender assist
drilling units. The operations and marketing of Aquadrill’s drilling units are
managed by Diamond Offshore Drilling, Inc., Energy Drilling Management Pte Ltd,
and Vantage Drilling International.

Forward-Looking Statements

This announcement includes forward-looking statements. Such statements are
generally not historical in nature, and specifically include statements about
completion of the merger transaction and the timing and amount of synergies
realized from the combination of Aquadrill and Seadrill, future cash flows and
liquidity of the Company, timing of closing the transaction, and Seadrill’s and
Aquadrill’s plans, strategies, business prospects, changes, and trends in their
businesses and the markets in which they operate. These statements are based on
Seadrill’s and Aquadrill’s respective management teams’ current plans,
expectations, assumptions and beliefs concerning future events impacting each of
Seadrill and Aquadrill, and the Company should the merger occur, and, therefore,
involve a number of risks, uncertainties and assumptions that could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements, which speak only as of the date of this news
release. Important factors that could impact our ability to complete the merger
transaction, recognize the benefits from the combination of Seadrill and
Aquadrill that Seadrill and Aquadrill envision, such as synergies, or otherwise
cause actual results to differ materially from those in the forward-looking
statements include, but are not limited to regulatory approvals of the merger
transaction or requirements or conditions of such approvals, the ability of the
Company to man and operate the Aquadrill rigs outside of the current management
agreement structure employed by Aquadrill, offshore drilling market conditions
including supply and demand, day rates, customer drilling programs and effects
of new rigs on the market, contract awards and rig mobilizations, contract
backlog, dry-docking and other costs of maintenance of the drilling rigs in
Seadrill’s and Aquadrill’s fleets, the cost and timing of shipyard and other
capital projects, the performance of the drilling rigs in Seadrill’s and
Aquadrill’s fleets, delay in payment or disputes with customers, Seadrill’s and
Aquadrill’s ability to successfully employ their drilling units, procure or have
access to financing, ability to comply with loan covenants, liquidity and
adequacy of cash flow from operations, fluctuations in the international price
of oil, international financial market conditions, changes in governmental
regulations that affect Seadrill, Aquadrill or the operations of their fleets,
increased competition in the offshore drilling industry, the impact of global
economic conditions and global health threats, Seadrill’s and Aquadrill’s
ability to maintain relationships with suppliers, customers, employees and other
third parties and each of Seadrill’s and Aquadrill’s ability to maintain
adequate financing to support their business plans following emergence from
their respective Chapter 11 proceedings, factors related to the offshore
drilling market, the impact of global economic conditions, Seadrill’s and
Aquadrill’s liquidity and the adequacy of cash flows for their obligations,
political and other uncertainties, the concentration of Seadrill’s and
Aquadrill’s revenues in certain geographical jurisdictions, limitations on
insurance coverage, Seadrill’s and Aquadrill’s ability to attract and retain
skilled personnel on commercially reasonable terms, the level of expected
capital expenditures, Seadrill’s and Aquadrill’s expected financing of such
capital expenditures, and the timing and cost of completion of capital projects,
fluctuations in interest rates or exchange rates and currency devaluations
relating to foreign or U.S. monetary policy, tax matters, changes in tax laws,
treaties and regulations, tax assessments and liabilities for tax issues, legal
and regulatory matters, customs and environmental matters, the potential impacts
on Seadrill’s and Aquadrill’s businesses resulting from climate-change or
greenhouse gas legislation or regulations, the impact on Seadrill’s and
Aquadrill’s businesses from climate-change related physical changes or changes
in weather pattern, and the occurrence of cybersecurity incidents, attacks or
other breaches to Seadrill’s and Aquadrill’s information technology systems,
including their rig operating systems. Consequently, no forward-looking
statement can be guaranteed. When considering these forward-looking statements,
you should also keep in mind the risks described from time to time in Seadrill’s
filings with the U.S. Securities and Exchange Commission (“SEC”), including its
Annual Report on Form 20-F for the year ended December 31, 2021, filed with the
SEC on April 29, 2022 (File No. 001-39327).

Seadrill and Aquadrill undertake no obligation to update any forward-looking
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is not possible for Seadrill and
Aquadrill to predict all of these factors. Further, Seadrill and Aquadrill
cannot assess the impact of each such factors on their businesses or the extent
to which any factor, or combination of factors, may cause actual results to be
materially different from those contained in any forward-looking statement.

Important Additional Information

This communication relates to a proposed business combination transaction (the
"Transaction") between Seadrill Limited and Aquadrill LLC. This communication is
for informational purposes only and does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any vote or
approval, in any jurisdiction, pursuant to the Transaction or otherwise, nor
shall there be any sale, issuance, exchange or transfer of the securities
referred to in this document in any jurisdiction in contravention of applicable
law.

In connection with the Transaction, Seadrill will file with the SEC a
registration statement on Form F-4 that will include a prospectus of Seadrill,
as well as other relevant documents concerning the Transaction. HOLDERS OF
AQUADRILL COMMON UNITS AND EQUITY AWARDS ARE URGED TO READ THE REGISTRATION
STATEMENT AND THE PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS
OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Access to the registration statement and the prospectus, as well as
other filings containing information about Seadrill and Aquadrill, are available
without charge at the SEC's website (http://www.sec.gov). Copies of the
documents filed with the SEC can also be obtained, without charge, by directing
a request to Seadrill.

More information:
Access the news on Oslo Bors NewsWeb site

579091_SDRL_Investor Presentation_Aquadrill Acquisition.pdf