SeaBird Exploration and Energy Drilling announce merger to form leading offshore oil and gas services provider

OSLO: SeaBird Exploration Plc, a leading provider of marine seismic acquisition services, announced today that it has signed a letter of intent to merge with Energy Drilling Pte Ltd, a premier tender-assisted drilling provider, in a share-for-share acquisition.

The combined company will be a diversified offshore oil and gas services provider with strong cash flows and significant capacity for near-term shareholder distributions. Approximately 651 million new SeaBird shares will be issued to Energy Drilling shareholders.

The listed company will undergo a name change, while the seismic and drilling businesses will continue to operate as Seabird Exploration and Energy Drilling.

Establishing an Offshore Leader

Energy Drilling, headquartered in Singapore, controls approximately 38% of the world’s actively marketed tender rigs, strategically positioned to address Southeast Asia’s growing demand for natural gas. With 80% of available days contracted for 2025 and 2026 and limited capital expenditures, Energy Drilling offers significant cash flow visibility, supported by a firm revenue backlog of USD 490 million.

Based on the latest SeaBird closing share price, currency ratio, net debt, and backlog, the combined company will have a pro-forma market capitalization of USD 381 million, net debt of approximately USD 44 million, and an estimated asset EBITDA backlog of more than USD 320 million, supporting strong cash flow visibility for the next two years.

“Merging with an operationally and financially robust market leader provides our shareholders with increased scale and reduced operational risk,” said Ståle Rodahl, Executive Chairman of Seabird Exploration. “Energy Drilling shares our focus on niche market leadership with strong profitability and a capital allocation strategy that prioritizes distribution of all excess cash to shareholders.”

Strong Commitment to Shareholder Distributions

The combined entity will prioritize shareholder distributions, aiming to distribute all excess liquidity on a quarterly basis. The projected 2025/26 free cash flow to equity is expected to exceed 50% of the current share price, including the approved NOK 0.40 per share set for distribution in Q1 2025. Additionally, there is potential to refinance the combined debt to optimize shareholder distributions.

“This merger represents a transformative opportunity for our shareholders and other stakeholders,” said Alf C. Thorkildsen, Chairman of Energy Drilling. “By joining forces with SeaBird, we are creating a publicly listed company uniquely positioned to deliver industry-leading shareholder returns through distributions and accretive growth.”

The combined entity will have ample financial flexibility to pursue growth opportunities within existing segments and the broader offshore oil services industry, only considering growth opportunities that are accretive to shareholders while maintaining low financial risk and cash flow visibility.

Key Terms and Conditions

The agreed exchange ratio will result in Energy Drilling shareholders owning 89% of the combined company. Based on SeaBird’s closing share price on January 31st, 2025, the equity value of Energy Drilling in the transaction is NOK 3,835 million. The transaction is supported by the Board of Directors of both companies and the shareholders of Energy Drilling. The five largest shareholders in SeaBird have expressed support for the transaction, constituting approximately 39% of the shares outstanding in SeaBird.

The transaction remains subject to customary closing conditions, including final documentation, shareholder approval, confirmatory due diligence, regulatory approvals, tax redomiciliation of SeaBird to Cyprus, and no mandatory offer for the combined entity being triggered. The transaction is expected to close in Q2 this year.