Great Offshore To Acquire Scorpion Offshore

Great Offshore (GOL), Mumbai-based integrated offshore oilfield services company, has Norwegian oil rig company Scorpion Offshore on its radar for a complete buyout. The value of the proposed acquisition is estimated at between $500 million and $550 million. Motilal Oswal are advisors to GOL for the deal.
Scorpion Offshore, a US company listed in Norway, has five ultra-premium LeTourneau Super 116 jack-up rigs on order at Keppel AmFels, a Texas-based shipyard, and it has already taken delivery of one rig.

Great Offshore offers a broad spectrum of services to upstream oil and gas producers for E&P activities. The company has a fleet size of over 40 offshore vessels, including two exploratory rigs.

GOL Managing Director Vijay Sheth declined to comment on the proposed acquisition. Ashutosh Maheswari, head of investment banking, Motilal Oswal, also declined to comment.

Industry sources, however, pointed out that the company was yet to finalise a special funding pattern with leading banks for the acquisition. At a recent board meeting GOL had offered Exim Bank 15 lakh preference shares of Rs 1,000 each, optionally convertible into equity shares, at a price of Rs 875 a share.

According to industry sources negotiations for the acquisition were at an advanced stage.

Oil and gas exploration & production companies, among them Reliance Industries and ONGC, are facing a shortage of drilling rigs and rig construction yards are overbooked till 2011. Scorpion Offshore?EUR(TM)s five rigs will, therefore, be a big asset for Great Offshore. Each rig can fetch $1,90,000 a day on a yearly contract. A five-year contract could get about $1,50,000 a day.

Meanwhile, the GOL scrip lost 2.57 per cent on the Bombay Stock Exchange on Friday, to close at Rs 794.30, from its previous close of Rs 815.25.
Great Offshore was formed by a demerger of Great Eastern Shipping Company?EUR(TM)s offshore business. Leading rig services companies in the country include Aban Loyd, Greatship India (a subsidiary of GE Shipping), Mercator Lines and Jindal Offshore.

source: Business Standard