Seawell To Buy Allis-Chalmers

August 14, 2010

mounds-of-cashBermuda-registered Seawell Limited and Allis-Chalmers Energy Inc. announced that their Boards of Directors have unanimously approved a definitive merger agreement providing for the acquisition of Allis-Chalmers by Seawell in a transaction valued at approximately $890 million (including assumed debt).

The combined company will have approximately 6,500 employees and is projected by equity research analysts to have an estimated revenues of USD 1.3 billion and a contribution to capital or EBITDA of USD 195 million in 2010. The combined company will operate its Drilling and Well Services offerings with a global footprint covering more than 30 of the world’s key oil and gas regions including the US, Gulf of Mexico, Brazil, Argentina, North Sea, Middle East, Africa and Southeast Asia / Pacific.

The combined Drilling Services offering will include platform drilling, land contract drilling, modular rigs, maintenance of drilling systems, directional drilling technology, underbalanced drilling, facility engineering services, rig and riser inspections, and oilfield rentals. The company will be able to provide its customers with fully integrated drilling services, both onshore and offshore, with more than 4,000 experienced drilling crew members and senior directional drillers. The Well Services offering will include electric and mechanical wireline services, production logging services, coil tubing services, ultrasonic investigation logging services, down-hole cameras, and advanced well fishing services. The combined company has a long track record of safe and efficient operations in the North Sea, USA and South America.

Seawell’s Executive Chairman, Jorgen Peter Rasmussen, said: “We are very pleased to welcome Allis-Chalmers’ employees and management to Seawell. This is a major step in our quest to create a global first-class drilling and well services company focused on assisting our customers in producing more hydrocarbons from their existing fields. We complement each other with a much improved geographical footprint, similar focus on customers and a wider range of technology and services, which we are now able to offer to our combined customer base. We intend to build a unique and leading company in the oilfield service sector.”

Mr. Rasmussen foresees that “the merger will allow the combined company to grow the business and profitability faster than each of the companies on their own. We invite all Allis-Chalmers stakeholders to join the new combined company and participate in an exciting future as the new company will have the ambition to become one of the largest independent well services companies.”

Under the agreement, Allis-Chalmers stockholders will have the right to elect USD 4.25 in cash or 1.15 Seawell common shares for each share of Allis-Chalmers common stock, subject to proration if more than 35% of the shares elect to receive cash. Shares of Allis-Chalmers’ existing preferred stock will be treated as common stock on an as converted basis. Based on the closing price of the Seawell common shares on the NOTC on August 12, 2010, the implied acquisition price represents a 28% premium to Allis-Chalmers’ six month average stock price and a 77% premium over today’s closing price. The merger is conditioned, among other things, on the listing of Seawell on the Oslo Bors or the London Stock Exchange and Seawell raising no less than an additional USD 100 million in equity. The transaction is intended to be tax-free to stockholders of both companies for U.S. federal income tax purposes and will be accounted for as a purchase.

Upon completion of the merger, Jørgen Peter Rasmussen (51) will be the combined company’s new Chief Executive Officer and President, and a member of the Board of Directors. The new company’s Chief Operating Officer and Executive Vice President will be Thorleif Egeli (46) who is currently the Chief Executive Officer of Seawell Management AS.

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