Aquadrill LLC has entered into an agreement for the sale of a semisubmersible drilling unit, the “Leo”, with a subsidiary of BW Energy (the “Buyers”) for USD 14 million.

The rig is expected to be repurposed as a Floating Production Unit, thereby removing the rig from the drilling market.

Under the terms of the agreement, if the unit is used to perform drilling services in the future, liquidated damages of USD 50 thousand for each day the unit is used to perform such services will apply, up to a maximum of USD 6 million. Additionally, if within the first two years of closing the unit is sold on terms which do not exclude the use of the unit for drilling purposes, and the resale price exceeds USD 15 million, the Buyers will be obliged to pay the Company 50% of the amount by which the resale price exceeds USD 15 million.

Certain pieces of capital equipment belonging to the unit have been excluded from the sale including but not limited to the BOP, top drive and travelling block, which will become part of Aquadrill’s capital spares inventory. In the event these capital spares are used for our existing fleet, the Company expects to realize approximately USD 7 million in savings vs purchasing equivalent replacement parts.