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Noble and Shell complete JV agreement for Bully I and Bully II

Rig Lynx
  • By Rig Lynx
  • Dec 09, 2019
  • Category : Archives
  • Views : 1904

Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble”), completed the previously disclosed transaction with a subsidiary of Royal Dutch Shell plc (“Shell”) 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”). 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 Bully I and Bully II joint ventures (the “JV Interests”).

The amount agreed by the parties for Shell to buy out the Drilling Contract was based on a negotiated contract margin of approximately $206,000 per day for the remaining 888 days of the contract. The resulting gross value of $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 $166 million (the “Buyout Price”). In exchange for Shell’s JV Interests, Noble issued a note payable to Shell (the “JV Note”). The 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. 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 $10 million attributed to the remaining value of the JV Interests acquired by Noble.

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 $107 million note which was assigned back to Noble as part of the Buyout Price, and Noble received approximately $59 million in cash from Shell.

Source: Noble

Image: Noble Drilling

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