Shelf Drilling falls in Oslo market debut, optimistic on rig rates

The Dubai-based company's shares began trading in Oslo on Monday

  

OSLO-Shelf Drilling, the world's largest owner of shallow water rigs, made its debut on the Oslo stock exchange on Monday but its shares fell 2.6 percent from their initial public offering price.

The Dubai-based company's shares began trading in Oslo four years after it abandoned plans to list in London in the wake of an oil price downturn. 

Its shares traded at 63.64 Norwegian crowns ($7.86) by 1212 GMT, below its IPO price tag of 65.35 crowns.

Shelf Drilling raised about $225 million in the offering, the company said on Friday, the latest drilling firm to list in Oslo to raise capital. urn:newsml:reuters.com:*:nL8N1TO0OO

Chief Executive David Mullen told Reuters on Monday the company expected to see higher rig rates in 2019 and more consolidation of the fragmented market.

Mullen said he expected utilisation of marketed rigs to rise to near 80 percent by the end of this year from 74 percent currently, giving rig owners more leverage to ask for higher prices.

"So going into 2019 we should see some pricing power, and some real price movements," he said in an interview, adding that the Middle East, North Sea and West Africa were the most promising regions for jack-up rigs.

About 80 percent of Shelf Drilling's current business relates to drilling extra wells at existing oilfields to help to drain the reservoirs or to repair existing wells.

As the recovery in crude oil prices increases oil companies' interest in offshore exploration and field developments, Mullen plans to acquire more so-called premium rigs, better suited to search for new resources than standard specification rigs.

"Today we have eight premium jack-ups and we want to see that grow ... I would like to ultimately grow to a fleet of 15, maybe 20, premium jack-up rigs," Mullen said.

The company has said it planned to use part of the IPO proceeds to buy a new premium rig.

Mullen also said he expected to see more consolidation in the drilling rig market between small players, but also some big deals.

"I think you are going to see some big mergers ... but we are more interested in acquiring assets, not so much interested in doing broad M&A deals," he said.

Copenhagen-listed conglomerate A.P. Moller-Maersk is expected to try to sell its drilling arm, Maersk Drilling, but has not found a buyer so far. 

Mullen said Shelf Drilling itself was not seeking a broad deal with Maersk, but could be interested in buying some of the Danish company's rigs.

($1 = 8.1000 Norwegian crowns)

(Reporting by Nerijus Adomaitis, editing by Terje Solsvik and Jane Merriman) ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters Messaging: nerijus.adomaitis.thomsonreuters@reuters.net))


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