Highlights Compelling Strategic and Financial
Rationale ofPending Acquisition of Atwood OceanicsAdds
High-Specification Assets at Attractive, Below-Market
ValuesProvides Substantial Upside to Offshore RecoveryMaintains
Financial Flexibility Through 2024
Ensco plc (NYSE: ESV) ("Ensco" or the "company") today announced
that it has filed an investor presentation with the U.S. Securities
& Exchange Commission (“SEC”) that provides an overview of the
rationale for and benefits of its pending acquisition of Atwood
Oceanics, Inc. (NYSE: ATW). The presentation is also available on
the Investors section of Ensco’s website at
http://www.enscoplc.com/investors/default.aspx.
Key highlights of the pending transaction:
High-Quality Assets: Unique opportunity
to add high-specification, complementary assets in scale that will
significantly strengthen and renew Ensco’s fleet
- Floater fleet renewal in scale is
required for Ensco to remain competitive over time; Atwood’s four
best-in-class1 ultra-deepwater drillships increase Ensco’s exposure
to this critical segment of the high-specification rig market.
- Atwood’s ultra-deepwater
semisubmersibles significantly enhance Ensco’s fleet and add
leading exposure to the Australian market where Ensco has not
historically had a meaningful presence.
- Atwood’s five premium jackups will
facilitate fleet renewal and enable the rationalization of Ensco’s
older assets over time.
The Right Time: Recent marketing
success and customer dialogue support timing to add
high-specification assets while valuations remain
attractive
- Contract awards and indicators of
future customer demand have shown positive signs recently, and the
company expects established offshore drillers with superior
technology, high-specification assets and geographic reach to be
best positioned to grow market share.
- On 11 July 2017, Ensco announced that
it had been awarded three drillship contracts offshore West Africa,
representing an aggregate three years of contracted term and more
than six additional years of options.
- Additionally, Atwood recently announced
that it had been awarded a drillship contract from Kosmos Energy
offshore West Africa.
Compelling Value: Acquisition of
high-specification assets at per-rig values materially below market
enables Ensco to generate significant shareholder value accretion
relative to stand-alone scenarios
- The company estimates the purchase
price for Atwood’s six floaters is approximately $222 million per
rig, including the acquisition premium, which is well below values
for comparable assets that could not be acquired in similar
scale.
- The transaction is expected to generate
double-digit accretion in the current environment while also
remaining significantly accretive in protracted recovery
scenarios.
- Ensco participated in a competitive
process, securing Atwood’s high-specification assets with a
disciplined proposal that was within 10% of a competing bid,
demonstrating value in line with the market.
- The acquisition offers meaningful,
achievable synergies that provide significant value to Ensco
shareholders.
- Ensco previously announced targeted
annual run-rate expense synergies of $65 million beginning in 2019,
and following initial integration planning, the company now expects
to exceed these targets.
- 2018 expense synergies are projected to
exceed $45 million.
- Total synergies create more than $400
million of present value at a 10% discount rate, with more than
$280 million expected to accrue to Ensco shareholders (or
approximately 20% of Ensco’s current share price).
Substantial Upside: Atwood’s premium
assets are expected to have a strong EBITDA growth profile in a
market recovery, which would provide significant upside to Ensco’s
share price
- Based on assumptions outlined in the
presentation, Atwood’s six floaters could generate EBITDA of
approximately $100 million per year if contracted day rates were to
average $200,000 and approximately $500 million per year if
contracted day rates were to average $400,000.
- Using an illustrative multiple of six
times annual EBITDA generated from Atwood’s floater fleet in a
recovery scenario where contracted day rates average $300,000 per
rig, the implied value per pro forma Ensco share would exceed $4.00
– more than 90% of Ensco’s current share price.
Strong Liquidity: Ensco maintains
financial flexibility and sufficient liquidity to cover debt
maturities into 2024
- Following the anticipated repayment of
Atwood’s outstanding revolver balance and senior notes upon
closing, Ensco will maintain a strong pro forma liquidity position,
which was approximately $3.3 billion as of 30 June 2017 and
included a fully available $2.25 billion revolving credit
facility.
- With pro forma cash and short-term
investments that exceed debt maturities prior to 2024, Ensco has
sufficient liquidity runway to bridge the company to better market
conditions.
- Ensco has consistently demonstrated
prudent operational and financial management throughout the market
downturn.
In summary, this compelling transaction enables Ensco to
meaningfully renew its fleet with high-quality assets at attractive
values. Furthermore, this opportunity to generate significant
shareholder value with substantial upside can be achieved while
while maintaining financial flexibility through 2024 and
beyond.
As previously announced, on 30 May 2017, Ensco and Atwood
entered into a definitive merger agreement under which Ensco will
acquire Atwood in an all-stock transaction that was unanimously
approved by each company’s board of directors. Under the terms of
the merger agreement, Atwood shareholders will receive 1.60 shares
of Ensco for each share of Atwood common stock for a total value of
$10.72 per Atwood share based on Ensco’s closing share price of
$6.70 on 26 May 2017. Upon close of the transaction, Ensco and
Atwood shareholders will own approximately 69% and 31%,
respectively, of the outstanding shares of Ensco plc. There are no
financing conditions for this transaction. The company anticipates
closing the transaction in the first week of October 2017.
About Ensco
Ensco plc (NYSE: ESV) brings energy to the world as a global
provider of offshore drilling services to the petroleum industry.
For 30 years, the company has focused on operating safely and going
beyond customer expectations. Ensco is ranked first in total
customer satisfaction in the latest independent survey by
EnergyPoint Research - the seventh consecutive year that Ensco has
earned this distinction. Operating one of the newest
ultra-deepwater rig fleets and a leading premium jackup fleet,
Ensco has a major presence in the most strategic offshore basins
across six continents. Ensco plc is an English limited company
(England No. 7023598) with its corporate headquarters located at 6
Chesterfield Gardens, London W1J 5BQ. To learn more, visit our
website at www.enscoplc.com.
Forward-Looking Statements
Statements included in this press release regarding the proposed
transaction, benefits, expected synergies and other expense savings
and operational and administrative efficiencies, opportunities,
timing, expense and effects of the transaction, financial
performance, accretion to discounted cash flows, revenue growth,
future dividend levels, credit ratings or other attributes of Ensco
following the completion of the transaction and other statements
that are not historical facts, are forward-looking statements
(including within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended). Forward-looking statements include words
or phrases such as “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “plan,” “project,” “could,” “may,” “might,” “should,”
“will” and similar words These statements involve risks and
uncertainties including, but not limited to, actions by regulatory
authorities, rating agencies or other third parties, actions by the
respective companies’ security holders, costs and difficulties
related to integration of Atwood, delays, costs and difficulties
related to the transaction, market conditions, and Ensco’s
financial results and performance following the completion of the
transaction, satisfaction of closing conditions, ability to repay
debt and timing thereof, availability and terms of any financing
and other factors detailed in the risk factors section and
elsewhere in Ensco’s and Atwood’s Annual Report on Form 10-K for
the year ended December 31, 2016 and September 30, 2016,
respectively, and their respective other filings with the
Securities and Exchange Commission (the "SEC"), which are available
on the SEC’s website at www.sec.gov. Should one or more of these
risks or uncertainties materialize (or the other consequences of
such a development worsen), or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those
forecasted or expected. All information in this release is as of
today. Except as required by law, both Ensco and Atwood disclaim
any intention or obligation to update publicly or revise such
statements, whether as a result of new information, future events
or otherwise.
Important Additional Information Regarding the
Transaction
In connection with the proposed transaction, Ensco has filed a
registration statement on Form S-4, including a joint proxy
statement/prospectus of Ensco and Atwood, with the SEC. INVESTORS
AND SECURITY HOLDERS OF ENSCO AND ATWOOD ARE ADVISED TO CAREFULLY
READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS
(INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS
ASSOCIATED WITH THE TRANSACTION. A definitive joint proxy
statement/prospectus will be sent to security holders of Ensco and
Atwood in connection with the Ensco and Atwood shareholder
meetings. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when available) and other
relevant documents filed by Ensco and Atwood with the SEC from the
SEC's website at www.sec.gov. Security holders and other interested
parties will also be able to obtain, without charge, a copy of the
joint proxy statement/prospectus and other relevant documents (when
available) by directing a request by mail or telephone to either
Investor Relations, Ensco plc, 5847 San Felipe, Suite 3300,
Houston, Texas 77057, telephone 713-430-4607, or Investor
Relations, Atwood Oceanics, Inc., 15011 Katy Freeway, Suite 800,
Houston, Texas 77094, telephone 281-749-7840. Copies of the
documents filed by Ensco with the SEC will be available free of
charge on Ensco’s website at www.enscoplc.com under the tab
“Investors.” Copies of the documents filed by Atwood with the SEC
will be available free of charge on Atwood’s website at
www.atwd.com under the tab “Investor Relations.” Security holders
may also read and copy any reports, statements and other
information filed with the SEC at the SEC public reference room at
100 F Street N.E., Room 1580, Washington D.C. 20549. Please call
the SEC at (800) 732-0330 or visit the SEC’s website for further
information on its public reference room.
Participants in the Solicitation
Ensco and Atwood and their respective directors, executive
officers and certain other members of management may be deemed to
be participants in the solicitation of proxies from their
respective security holders with respect to the transaction.
Information about these persons is set forth in Ensco's proxy
statement relating to its 2017 General Meeting of Shareholders and
Atwood’s proxy statement relating to its 2017 Annual Meeting of
Shareholders, as filed with the SEC on 31 March 2017 and 9 January
2017, respectively, and subsequent statements of changes in
beneficial ownership on file with the SEC. Security holders and
investors may obtain additional information regarding the interests
of such persons, which may be different than those of the
respective companies' security holders generally, by reading the
joint proxy statement/prospectus and other relevant documents
regarding the transaction, which will be filed with the SEC.
No Offer or Solicitation
This press release is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote in any jurisdiction pursuant to the
proposed transaction or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. Subject to certain exceptions to
be approved by the relevant regulators or certain facts to be
ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
Service of Process
Ensco is incorporated under the laws of England and Wales. In
addition, some of its officers and directors reside outside the
United States, and some or all of its assets are or may be located
in jurisdictions outside the United States. Therefore, investors
may have difficulty effecting service of process within the United
States upon those persons or recovering against Ensco or its
officers or directors on judgments of United States courts,
including judgments based upon the civil liability provisions of
the United States federal securities laws. It may not be possible
to sue Ensco or its officers or directors in a non-U.S. court for
violations of the U.S. securities laws.
1 Drillships capable of operating in at least 10,000’ of water
with dual 2.5 million lb. hookload derricks, dual 7 Ram blowout
preventers and variable deck loads exceeding 22,000 tons
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version on businesswire.com: http://www.businesswire.com/news/home/20170814005561/en/
Investor & Media Contacts:Nick Georgas, 713-430-4607Director
- Investor Relations and CommunicationsorTim Richardson,
713-430-4490Manager - Investor Relations
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