Seadrill Limited — M&A Activity 2015

Jun 17, 2015

SDRL - Seadrill Limited agrees to sell the ultra-deepwater drillship the West Polaris to Seadrill Partners LLC

SDRL - Seadrill Limited agrees to sell the ultra-deepwater drillship the West Polaris to Seadrill Partners LLC

Hamilton, Bermuda, June 17, 2015 - Seadrill Limited (NYSE: SDRL) (the "Company"

or "Seadrill") announced today that it has entered into an agreement with

Seadrill Operating LP ("Seadrill Operating"), the 58% owned subsidiary of

Seadrill Partners LLC ("Seadrill Partners"), pursuant to which Seadrill

Operating will acquire all of the shares of Seadrill Polaris Ltd. ("Seadrill

Polaris"), the entity that owns and operates the drillship, the West Polaris

(the "Polaris Acquisition") from Seadrill. The Polaris Acquisition is expected

to close within 7 days.

The West Polaris is a 6th generation, dynamically positioned drillship delivered

from the Samsung shipyard in 2008. The West Polaris is expected to carry out

operations in Angola until the end of its contract with ExxonMobil in March

The total consideration for the Polaris Acquisition is comprised of $204 million

in cash and $336 million of debt outstanding under the existing facility

financing the West Polaris. Seadrill Operating will fund the balance of the

purchase price with a seller's credit of $50 million due in 2021 that carries an

interest rate of 6.5% per annum.

Based on the assumed present value of the seller's credit, excess dayrate to be

paid to the Company under the current drilling contract and assumed excess

dayrate to be paid to the Company following the conclusion of the current

drilling contract, the board of directors of the Company believes that the total

value proposition of the Polaris Acquisition for Seadrill is approximately $750

million.

The West Polaris is currently contracted with ExxonMobil on a daily rate of

$653,000. Under the terms of the acquisition agreement, Seadrill Polaris has

agreed to pay Seadrill any dayrate it receives in excess of $450,000 per day,

adjusted for daily utilization, for the remainder of the ExxonMobil contract.

Assuming an average economic utilization of 95%, Seadrill will receive

approximately $60 million in cash per year from the current ExxonMobil

contract.  Additionally, Seadrill Polaris has agreed to pay Seadrill 50% of any

dayrate above $450,000 per day, adjusted for daily utilization, after the

conclusion of the existing contract until 2025.

As part of the acquisition agreement, Seadrill Operating's obligation to repay

the $50 million seller's credit due to Seadrill will be reduced if the average

contracted dayrate under any replacement contract is below $450,000 until the

seller's credit's maturity in 2021.  The amount of seller's credit due will be

reduced until Seadrill Partners' effective dayrate is $450,000 or until the

seller's credit is reduced to zero.  Should the average dayrate of the

replacement contract be above $450,000, the entire $50 million seller's credit

must be paid to Seadrill upon maturity of the seller's credit in 2021.

By agreeing to sell the West Polaris to Seadrill Partners, Seadrill is able to

realize $204 million in cash upon closing of the transaction while retaining up

to $203,000 per day in revenues under the current drilling contract without the

associated operating expense.  Additionally, following the conclusion of the

current contract, Seadrill will continue to have a degree of exposure to future

dayrates by sharing revenues above $450,000 per day with Seadrill Partners,

again without the associated operating expense.  The Board is pleased to

announce a transaction that serves to realize value from multiple sources in

addition to the sale price, while at the same time supporting an important

associated company in its goals to increase distribution coverage, asset

diversification and revenue backlog.

FORWARD LOOKING STATEMENTS

This news release includes forward looking statements. Such statements are

generally not historical in nature, and specifically include statements about

the Company's plans, strategies, business prospects, changes and trends in its

business and the markets in which it operates. In particular, statements

regarding the Company's ability to complete the Polaris Acquisition and the

anticipated total value proposition are considered forward looking statements.

These statements are made based upon management's current plans, expectations,

assumptions and beliefs concerning future events impacting the Company and

therefore involve a number of risks, uncertainties and assumptions that could

cause actual results to differ materially from those expressed or implied in the

forward-looking statements, which speak only as of the date of this news

release. Consequently, no forward-looking statement can be guaranteed. When

considering these forward-looking statements, you should keep in mind the risks

described from time to time in the Company's filings with the Securities and

Exchange Commission, including its Annual Report on Form 20-F (File No.

001-34667). The Company undertakes no obligation to update any forward looking

statements to reflect events or circumstances after the date on which such

statement is made or to reflect the occurrence of unanticipated events. New

factors emerge from time to time, and it is not possible for the Company to

predict all of these factors. Further, the Company cannot assess the impact of

each such factor on its business or the extent to which any factor, or

combination of factors, may cause actual results to be materially different from

those contained in any forward looking statement.

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1929042]