Noble Corp buys Shell’s interests and ends the Drillships Joint Venture

Offshore drilling contractor ‘Noble Corp’ completed the transaction of buying Shell’s interests in two drillships & Shell bought out the remaining term of drilling contract for NB II

Noble Corporation announced the completion of a previously disclosed transaction with a subsidiary of Royal Dutch Shell plc relating to the two joint ventures in which Noble and Shell each held a fifty percent interest (the “Bully I and Bully II joint ventures”).

According to Noble filing in SEC on Tuesday, in such transaction, Shell bought out the remaining term of its drilling contract for the drillship Noble Bully II (the “Drilling Contract”), and Noble acquired Shell’s interests in the 2011 built Drillships, Bully I and Bully II joint ventures.

SHELL’S BUYOUT PRICE

According to SEC filing, the amount agreed by the parties for Shell to buy out the Drilling Contract was based on a negotiated contract margin of approximately U$206,000 per day for the remaining 888 days of the contract.

The resulting gross value of U$183 million was subject to a net present value adjustment and was further adjusted for amounts relating to a prior period, resulting in a buyout price of U$166 million.

As a result of this exchange for Shell’s JV Interests, Noble issued a note payable to Shell, said Noble.

Both parties agreed to a net settlement mechanism whereby Shell paid a portion of the Buyout Price to Noble in cash, and the remaining portion of the Buyout Price was satisfied by Shell’s assignment of the JV Note back to Noble.

NOBLE’s ACQUISITION OF BOTH DRILLSHIPS

The ultimate cash amount owed to Noble was calculated by adjusting the Buyout Price by the fifty percent share owed to Noble as an equal partner in the Bully II joint venture, in addition to adjustments for working capital and other items, including a nominal amount of U$10 million attributed to the remaining value of the JV Interests acquired by Noble.

Noble said in SEC filing that, based on the foregoing considerations, the transaction was ultimately structured such that Noble made a noncash payment to Shell for the JV Interests in the form of a U$107 million note which was assigned back to Noble as part of the Buyout Price, and Noble received approximately U$59 million in cash from Shell.