Announcement of Intention to Float on the London Stock Exchange

12 June 2014

Shelf Drilling, Ltd. (“Shelf Drilling” or the “Company” and, together with its subsidiaries, the “Group”), a leading international shallow water offshore drilling contractor, today announces its intention to proceed with an initial public offering to institutional investors (the “IPO” or the “Global Offer”). Shelf Drilling intends to apply for admission of its ordinary shares to the standard listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange.

Shelf Drilling is the world’s largest independent leg cantilever (“ILC”) jackup fleet operator focused solely on shallow water markets. The Group has built a market leading position as a provider of offshore contract drilling services to oil and gas customers and is primarily engaged in development and workover activity on producing assets in water depths of up to 400 feet.

The Group’s fleet consists of 37 ILC jackup rigs, two contracted ILC jackup rigs under construction and one swamp barge. Shelf Drilling currently operates across four key shallow water regions: the Middle East, North Africa and Mediterranean (“MENAM”), Southeast Asia, India and West Africa. Shallow water accounts for 85 per cent. of global offshore production, and 77 per cent. of global offshore reserves.

Shelf Drilling conducts a “fit-for-purpose” strategy. This strategy entails the delivery of rigs prepared and provisioned precisely for each customer’s project and its geographic circumstances. Further, the Group maintains a cost-efficient organisation and operational structure designed to support shallow water drilling in its core markets.

The Group has secured an extensive customer base of national oil companies, integrated major oil companies, and independent oil companies. These clients seek proven drilling contractors, capable of consistently delivering their specific well programmes safely and reliably. Since inception, uptime performance of the fleet has been greater than or equal to 98.0 per cent., and safety performance has been consistently equal to, or better than, the industry average.

For the year ended 31 December 2013, the Group reported Adjusted Revenues of US$1.2 billion and Adjusted EBITDA of US$468 million. As at 27 May 2014 (the date of the latest Fleet Status Report), contract backlog stands at US$3.4 billion with an average contracted period per rig in excess of two years. The Group is led by an experienced team of executives with expertise in the global oil and gas industry, including David Mullen as Chief Executive Officer and Sir Richard Olver as Chairman elect.

Following the IPO, the Company intends to adopt a dividend policy with a pay-out ratio of 40 to 60 per cent. of net income, reflecting the Group’s robust liquidity, moderate leverage, strong contract backlog and forward revenue visibility, while retaining sufficient capital to invest in growth opportunities in the Group’s core markets.

David Mullen, Chief Executive Officer, Shelf Drilling, said:
Shelf Drilling was conceived to provide customers with a unique service offering in shallow water drilling. We combine substantial scale of operations with a sole focus on the shallow water segment of the offshore drilling market and differentiate ourselves from the competitive landscape through the delivery of fit-for-purpose rigs, customised to be ideally suited for the environments in which we operate and the customer’s field development plans. For customers this provides both dependability and efficiency in operation – qualities that translate directly into their cash flows.
Since its creation in 2012, Shelf Drilling has proven the appeal of this offering to customers with strong growth in revenues and the exceptional development of our contract backlog. Becoming a public company will further enable us to invest in the drilling services our customers seek and build sustainable, profitable growth in the world’s most prolific hydrocarbon-bearing shallow water basins.

Sir Richard Olver, Chairman elect, Shelf Drilling, said:
Shelf Drilling will bring to public equity investors the opportunity to invest in a strong, cash generative business with good forward visibility and growth potential. Since inception, the highly able Shelf Drilling executive team has delivered a tremendous result in building a strong presence among blue chip customers in several of the world’s most prolific production basins. Shelf Drilling is now a significant force in its markets and presents an investment proposition combining capital growth with an attractive dividend stream.

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