Shelf Drilling, Ltd. Announces Agreement to Acquire Shelf Drilling (North Sea), Ltd.

16 Sep 2024 06:30 CEST

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, INTO OR WITHIN CANADA, AUSTRALIA, NEW ZEALAND, SOUTH-AFRICA, HONG
KONG, JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD
BE UNLAWFUL. OTHER RESTRICTIONS APPLY.

PRESS RELEASE

SHELF DRILLING, LTD. ANNOUNCES AGREEMENT TO ACQUIRE SHELF DRILLING (NORTH SEA),
LTD.

Dubai, September 16, 2024 - Shelf Drilling, Ltd. (“SHLF” or “Shelf Drilling”)
and Shelf Drilling (North Sea), Ltd. (“SDNS” or “Shelf Drilling North Sea”)
today announce that the entities, including SHLF MergCo (as defined below), have
entered into an agreement and plan of merger (the “Merger Agreement”) whereby
SDNS will become a wholly owned subsidiary of SHLF (the “Proposed Merger”),
solidifying SHLF’s position as a leading global jack-up operator. Shareholders
of SDNS representing well in excess of the voting rights necessary to approve
the Proposed Merger have irrevocably undertaken to vote in favor of the
necessary resolutions to approve the Proposed Merger at a general meeting of
SDNS (the “SDNS General Meeting”) expected in October 2024. The directors of
SDNS who are considered independent of SHLF (the “Independent Directors”) have
approved and recommended the Proposed Merger.

The combination will fully consolidate SHLF’s jack-up fleet, solve the
previously disclosed funding gap in SDNS in an efficient manner and allow SHLF
to fully support the SDNS entity going forward. The combined company will draw
benefits from a simplified capital structure, while investors should benefit
from a more liquid, tradeable share.

The Proposed Merger is structured as a triangular merger between an indirect
subsidiary of SHLF (“SHLF MergCo”), SDNS (as the surviving entity in the
Proposed Merger), and SHLF as the issuer of the merger consideration shares, as
further described below.

As part of the Proposed Merger, the shareholders of SDNS (other than SHLF, SDNS
or any of their direct or indirect subsidiaries) would receive as consideration
for each SDNS share being cancelled in the Proposed Merger:

- 1.05 merger consideration shares in SHLF (the “Merger Shares”); and
- a cash consideration of NOK 8.0 per SDNS share, (together the “Merger
Consideration”).

This represents a total consideration of NOK 25.90 per SDNS share, and
corresponds to an equity value of SDNS of approximately NOK 2.6 billion, based
on a value per SHLF share of NOK 17.05, corresponding to the closing trade price
on the Oslo Stock Exchange as of September 13, 2024. The total cash
consideration element of the Merger Consideration amounts to approximately the
NOK equivalent of USD 30 million.

The Merger Consideration represents a premium of 13% to the market exchange
ratio based on closing prices of shares of SHLF and SDNS (NOK 23.00 on Euronext
Growth) on September 13, 2024, and a premium of 21% and 24% to the exchange
ratios calculated using the volume weighted average share prices for both
companies in the 1-month and 6-month periods calculated from September 13, 2024.

Fractions of shares will not be issued and allotted. In lieu of issuance of any
fractional share for SDNS shareholders who would otherwise have been entitled to
a fraction of a SHLF share shall be paid cash calculated using an average share
price calculation of the SHLF share prior to completion of the Proposed Merger.

It is expected that approximately 42 million new shares in SHLF will be issued
as consideration for the Proposed Merger (the “Merger Shares”). The Merger
Shares will be issued from the previously authorised but unissued shares of
SHLF.

SHLF has an indirect shareholding in SDNS of 60%, and such existing SDNS shares
shall continue to be SDNS shares upon the Proposed Merger, with SHLF not being
entitled to the Merger Consideration.

Following the completion of the transaction, existing SHLF holders will own
approximately 84% of SHLF, and SDNS shareholders (other than SHLF) will own
approximately 16% of SHLF.

Shelf Drilling CEO, Greg O’Brien, said “Combining Shelf Drilling North Sea into
Shelf Drilling fulfills our ambition to streamline the Shelf Drilling company
structure. The combination offers a pure play investment opportunity with
exposure to a uniquely positioned jack up fleet and platform servicing customers
across the regions where we operate. The transaction high-grades the Shelf
Drilling fleet with four premium jack ups and one ultra harsh jack up and allows
for Shelf Drilling to finance the USD 40m funding need in Shelf Drilling North
Sea in an efficient manner. Moreover, we expect shareholders in the combined
company to gain improved trading liquidity and better access to capital markets.
This transaction further underlines our commitment to driving value for all of
our stakeholders and is consistent with our focus of being a market leader in
core jack-up regions globally.”

The Independent Directors have unanimously decided to recommend the shareholders
of SDNS to vote in favor of the Proposed Merger. The Independent Directors
believe the terms of the Proposed Merger are in the best interests of SDNS and
the shareholders as a whole. The Independent Directors’ recommendation is based
on a thorough assessment of the Proposed Merger, including a fairness opinion
obtained from Clarksons Securities AS, which concludes that the Merger
Consideration is fair from a financial point of view. As part of the Merger
Agreement, the board of SDNS has, subject to customary conditions, undertaken
not to amend its recommendation nor solicit competing offers.

Shareholders of SDNS (including SHLF) holding in the aggregate 82,624,894 SDNS
shares, representing approximately 83% of the outstanding issued share capital
and voting rights, have irrevocably undertaken to vote in favor of the necessary
resolutions to approve the Proposed Merger at the SDNS General Meeting. An
approval of 75% of the votes cast is required at the SDNS General Meeting in
order to approve the Proposed Merger.

The completion of the Proposed Merger will be subject to the satisfaction of
certain conditions (unless such conditions are waived or agreed amended),
including but not limited to:

- Approval by the SDNS General Meeting;
- No breach of the warranties and representations of SDNS in the Merger
Agreement where such breach has a material adverse effect;
- The parties due performance, in all material respects, of the Merger
Agreement;
- No material adverse effect having occurred in relation to SDNS;
- No governmental authority shall having acted in a way restraining the Proposed
Merger; and
- SDNS not having amended or withdrawn its board recommendation or entered into
an agreement for a superior offer.

The Merger Agreement contains customary restrictive covenants on SDNS'
operations until completion of the Proposed Merger, and further states that the
Merger Agreement terminates in case the Proposed Merger has not been completed
by September 15, 2025.

The Merger Agreement will be sent to the shareholders of SDNS together with the
notice of the SDNS General Meeting. Such notice is expected to be sent on or
about September 19, 2024. The SDNS General Meeting will be held approximately
three weeks following the notice, with the Proposed Merger closing as soon as
possible thereafter, and with settlement of the Merger Consideration a few days
thereafter.

Further information about the Proposed Merger and the combined company will be
made available in a prospectus exempted document (the “Exempted Document”) to be
published by SHLF prior to the SDNS General Meeting.

Subject to timely fulfillment of the conditions for the Proposed Merger, the
Proposed Merger is expected to be completed towards the second half of October
2024.

The Merger Shares will not be registered under the U.S. Securities Act and may
not be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements under the U.S. Securities Act.
Merger Shares will therefore only be delivered to SDNS shareholders that are
either (i) not U.S. Persons as defined in Regulation S of the U.S. Securities
Act, or (ii) “accredited investors” as defined in Regulation D of the U.S.
Securities Act. U.S. Person shareholders in SDNS that are not Eligible U.S.
Shareholders will receive cash-in-lieu of the Merger Shares following a sale of
such Merger Shares they would otherwise be entitled to receive. Such Merger
Shares the non-Eligible U.S. Shareholders would otherwise be entitled to, will
be sold by the receiving agent appointed for the purpose of the merger for the
account of and for the risk of the relevant beneficiary with a proportional
distribution of net sales proceeds among the non-Eligible U.S. Shareholders.

Advisors

SpareBank 1 Markets AS is acting as financial advisor and Advokatfirmaet
Thommessen AS and Conyers Dill & Pearman Limited are acting as legal advisors to
SHLF in connection with the Proposed Merger. Advokatfirmaet Wiersholm AS and
Appleby are acting as legal advisors to SDNS.

For further information, please contact: investor.relations@shelfdrilling.com

About Shelf Drilling

Shelf Drilling is a leading international shallow water offshore drilling
contractor with rig operations across Middle East, Southeast Asia, India, West
Africa and the Mediterranean. Shelf Drilling was founded in 2012 and has
established itself as a leader within its industry through its fit-for-purpose
strategy and close working relationship with industry leading clients. The
company is incorporated under the laws of the Cayman Islands with corporate
headquarters in Dubai, United Arab Emirates. The company is listed on the Oslo
Stock Exchange under the ticker “SHLF”.

About Shelf Drilling North Sea

Shelf Drilling North Sea is a shallow water offshore drilling contractor
primarily operating in the North Sea. The company's fit-for-purpose strategy and
fleet of modern high-specification harsh environment jack-up rigs enable it to
offer a broad range of services in the shallow water drilling markets. SDNS is
incorporated under the laws of Bermuda. Since October 12, 2022, SDNS shares are
listed on the Euronext Growth Oslo Exchange under the ticker “SDNS”.

Additional information about Shelf Drilling can be found at
www.shelfdrilling.com.

IMPORTANT NOTICE

This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to the disclosure requirements pursuant
to Section 5-12 the Norwegian Securities Trading Act.

This announcement was published by Kate Weir, Secretary, Shelf Drilling (North
Sea), Ltd., and Shelf Drilling, Ltd. on September 16, 2024 at 06:30 am (CET).

This announcement is issued for information purposes only and does not
constitute notice to a general meeting or a merger plan, nor does it form a part
of any offer to sell, or a solicitation of an offer to purchase, any securities
in any jurisdiction. Neither this announcement nor the information contained
herein is for publication, distribution or release, in whole or in part,
directly or indirectly, in or into or from the United States (including its
territories and possessions, any State of the United States and the District of
Columbia), Australia, Canada, Japan, Hong Kong, South Africa or any other
jurisdiction where to do so would constitute a violation of the relevant laws of
such jurisdiction. The publication, distribution or release of this announcement
may be restricted by law in certain jurisdictions and persons into whose
possession any document or other information referred to herein should inform
themselves about and observe any such restriction. Any failure to comply with
these restrictions may constitute a violation of the securities laws of any such
jurisdiction.

The securities mentioned herein, including the consideration shares expected to
be issued as part of the Proposed Merger, have not been, and will not be,
registered under the United States Securities Act of 1933, as amended (the “US
Securities Act”). The securities may not be offered or sold in the United States
except pursuant to an exemption from the registration requirements of the US
Securities Act or in a transaction not subject to the US Securities Act.

Any decision with respect to the Proposed Merger should be made solely on the
basis of information to be contained in the actual notices to the general
meeting of SDNS and the Merger Agreement (with pertaining documents) related to
the Proposed Merger. You should perform an independent analysis of the
information contained therein when making any investment decision.

Matters discussed in this announcement may constitute forward-looking
statements. Forward-looking statements are statements that are not historical
facts and may be identified by words such as “believe”, “expect”, “anticipate”,
“strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and
similar expressions. By their nature, forward-looking statements involve risk
and uncertainty because they reflect the Company's current expectations and
assumptions as to future events and circumstances that may not prove accurate. A
number of material factors could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking statements.
No assurance can be given that such expectations will prove to have been
correct. The information, opinions and forward-looking statements contained in
this announcement speak only as at its date and are subject to change without
notice. Neither SDNS nor SHLF undertakes any obligation to review, update,
confirm, or to release publicly any revisions to any forward-looking statements
to reflect events that occur or circumstances that arise in relation to the
content of this announcement or otherwise.

SpareBank 1 Markets AS is acting exclusively for SHLF in connection with the
Merger and for no one else and will not be responsible to anyone other than SHLF
for providing the protections afforded to its clients or for providing advice in
relation to the Proposed Merger.

This announcement is for information purposes only and is not to be relied upon
in substitution for the exercise of independent judgment. It is not intended as
investment advice and under no circumstances is it to be used or considered as
an offer to sell, or a solicitation of an offer to buy any securities or a
recommendation to buy or sell any securities of SDNS, SHLF or otherwise.

More information:
Access the news on Oslo Bors NewsWeb site

627790_Presentation_Shelf Drilling to Acquire Shelf Drilling North Sea.pdf