December 28, 2020 – The Debtors filed a motion seeking approval for the private $25.0mn sale of a jack-up rig (the "ENSCO 101" or the the "Rig") to Russian entity JSC Arktikmorneftegazrazvedka (the “Buyer”). A memorandum of agreement between Debtor/seller Ensco Offshore International Company (“Ensco” or the “Seller”) and the Buyer is attached to the motion as Exhibit 1.
The Buyer is a wholly owned subsidiary of Zarubezhneft, a Russian state-controlled oil company based in Moscow that specializes in exploration, development and operation of oil and gas fields outside Russian territory. To date the Buyer has paid $100k of its $2.5mn cash deposit.
The motion notes, “As a result of the current market downturn, in the lead up to these chapter 11 cases, the Debtors implemented various initiatives to cut costs and increase efficiency, including preservation stacking certain uncontracted rigs, and retiring, selling, or scrapping certain other rigs from the fleet entirely. As part of this initiative, the Debtors decided to preservation stack one of its jack-up rigs, the ENSCO 101 (the ‘Rig’). The preservation process was completed and the Rig has been preservation stacked since October 2020. During the process of stacking the Rig, the Debtors were approached by the Buyer with an offer to purchase the Rig. Following arm’s-length negotiations, the Debtors determined that the Buyer’s offer of $25,000,000 in cash, on the terms and conditions set forth in the Agreement (the ‘Sale’), was in the best interests of the Debtors and their stakeholders, as the Sale would maximize the value of the Rig for the Debtors’ estates. Ensco and the Buyer have engaged in extensive, arm’s-length negotiations on the terms of the Agreement and expect to execute the Agreement in the coming weeks.
The Sale is a sound exercise of the Debtors’ business judgment, as it will provide the Debtors with approximately $24,750,000 of incremental liquidity and relieve them of the costs of holding the Rig, which has been preservation stacked since October 2020. The Debtors incur substantial costs in connection with preservation stacking the Rig, and would incur additional costs in connection with reactivating the Rig if the Company were to obtain a drilling contract utilizing the Rig. Given that the Debtors are not currently utilizing the Rig, realizing the value of the Rig now through the Sale is more beneficial to the Debtors’ estates than continuing to preservation stack the Rig.
In the Debtors’ business judgment, $25,000,000 is a fair, reasonable sale price for the Rig, and the Sale is the best available option to maximize the value of the Rig. The Debtors negotiated and signed the Agreement following weeks of extensive, arm’s-length negotiations.”
Key Terms of the Agreement:
- Seller: Ensco Offshore International Company, a Cayman Islands limited liability company
- Buyer: JSC “Arktikmorneftegazrazvedka,” a company incorporated in and under the laws of Russia
- Purchase Price: $25.0mn, less one percent commission (1%) payable to Arctic Offshore International AS by the Seller as an integral part of the closing procedures.
Read more Bankruptcy News