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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 21, 2016
Rowan Companies plc(Exact name of registrant as specified in its charter)
England and Wales
(State or Other Jurisdiction ofIncorporation or Organization)
1-5491(Commission File Number)
98-1023315(I.R.S. Employer
Identification Number)
Rowan Companies plc2800 Post Oak Boulevard
Suite 5450Houston, Texas
(Address of Principal Executive Offices)
77056-6189(Zip Code)
Registrant’s telephone number, including area code: (713) 621-7800
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the followingprovisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On November 21, 2016, Rowan Companies plc (“Rowan”) and the Saudi Arabian Oil Company (“Saudi Aramco”), through their subsidiaries, entered into aShareholders’ Agreement to create a 50/50 joint venture to own, manage and operate offshore drilling units in Saudi Arabia. The new entity is anticipated tocommence operations in the second quarter of 2017.
At formation of the new company, each of Rowan and Saudi Aramco will contribute US$25 million to be used for working capital needs. The AssetContribution and Transfer Agreements provide that at commencement of operations, Rowan will contribute three rigs and its local shore based operations, and SaudiAramco will contribute two rigs and cash to maintain equal equity ownership in the new company. Rowan will then contribute two more rigs in late 2018 when thoserigs complete their current contracts, and Saudi Aramco will make a matching cash contribution at that time. At the various asset contribution dates, excess cash isexpected to be distributed in equal parts to the shareholders. Rigs contributed will receive contracts for an aggregate 15 years, renewed and re-priced every threeyears, provided that the rigs meet the technical and operational requirements of Saudi Aramco.
Rowan rigs in Saudi Arabia not selected for contribution will be managed by the new company until the end of their current contracts pursuant to amanagement services agreement that provides for a management fee equal to a percentage of revenue to cover overhead costs. After the management period ends,such rigs may be selected for contribution, lease, or they will be required to relocate outside of the Kingdom.
Each of Rowan and Saudi Aramco will be obligated to fund their portion of the purchase of up to 20 new build jack-up rigs ratably over ten years. The firstrig is expected to be delivered as early as 2021. The partners intend that the newbuild jack-up rigs will be financed out of available cash from operations and/or fundsavailable from third party debt financing. Saudi Aramco as a customer will provide drilling contracts to support the new company in the acquisition of the new rigs. Ifcash from operations or financing is not available to fund the cost of the newbuild jack-up rig, each partner is obligated to contribute funds to purchase such rigs, upto a maximum amount of $1.25 billion per partner in the aggregate for all 20 newbuild jack-up rigs. Item 7.01 Regulation FD
On November 21, 2016, Rowan issued a press release announcing its joint venture with Saudi Aramco and related transactions. A copy of the press releaseis attached hereto as Exhibit 99.1 In addition, Rowan filed a presentation to be used with investors, which is included as Exhibit 99.2 hereto.
The information in Item 7.01 of this Current Report and in the exhibits attached hereto is being furnished and shall not be deemed “filed” for the purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Item 7.01 of this CurrentReport and in Exhibit 99.1 attached hereto shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of1933, as amended, except as shall be expressly set forth by specific reference in any such filing. Item 9.01 Financial Statements and Exhibits. Exhibit No. Description 99.1 Press release dated November 21, 201699.2 Presentation to be used with investors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: November 21, 2016 Rowan Companies plc By: /s/ Melanie M. Trent
Melanie M. Trent Executive Vice President, General Counsel, Chief Administrative Officer and Company Secretary
Index to Exhibits
Exhibit No. Description 99.1 Press release dated November 21, 201699.2 Presentation to be used with investors
Exhibit 99.1
Rowan Partners with Saudi Aramco to Create a New Offshore Drilling Company
HOUSTON, Nov. 21, 2016 /PRNewswire/ -- Rowan Companies plc ("Rowan") (NYSE: RDC) and the Saudi Arabian Oil Company ("Saudi Aramco") have signed,through their subsidiaries, an agreement to create a 50/50 joint venture to own, operate, and manage offshore drilling rigs in Saudi Arabia.
The new joint venture company will use Rowan's established business in Saudi Arabia as its base with a scope of operations covering Saudi Arabia's existing andfuture offshore oil and gas fields. The new company is anticipated to commence operations in the second quarter of 2017.
Tom Burke, President and Chief Executive Officer, stated, "Rowan has had a long and mutually beneficial relationship with Saudi Aramco and we welcome thisopportunity to further strengthen our partnership and extend our commitment to the region. The new company will uniquely position Rowan to participate in thegrowing Saudi Arabian offshore drilling market, and provide Rowan with a compelling opportunity for a long-term partnership with the world's leading oil and gascompany, and create a long-term, profitable growth platform with firm rig commitments."
At commencement of operations of the new company, Rowan will contribute three of its jack-up drilling rigs and Saudi Aramco will contribute two of its jack-updrilling rigs. Rowan will contribute an additional two jack-up rigs as they complete their current Saudi Aramco contracts in late 2018. The new company will alsomanage the operations of five Rowan jack-up rigs currently in Saudi Arabia, until their associated drilling contracts expire, which then may be released, leased by orcontributed to the new company thereafter. Rowan and Saudi Aramco have committed the new company to purchase future newbuild rigs that will be constructed inSaudi Arabia.
Interested parties are invited to view additional materials on the Investor Relations page of Rowan's website at www.rowan.com .
Rowan is a global provider of contract drilling services with a fleet of 30 mobile offshore drilling units, comprised of 26 jack-up rigs and four ultra-deepwaterdrillships. The Company's fleet operates worldwide, including the United States Gulf of Mexico, the United Kingdom and Norwegian sectors of the North Sea, theMiddle East and Trinidad. The Company's Class A Ordinary Shares are traded on the New York Stock Exchange under the symbol "RDC." For more information onthe Company, please visit www.rowan.com .
Statements herein that are not historical facts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including,without limitation, statements as to the expectations, beliefs and future expected business, financial and operating performance and prospects of the Company. Theseforward-looking statements are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual resultsto differ materially from those indicated by the forward-looking statements. Among the factors that could cause actual results to differ materially include oil andnatural gas prices, the level of offshore expenditures by energy companies, variations in energy demand, changes in day rates, cancellation, early termination orrenegotiation by our customers of drilling contracts, risks associated with fixed cost drilling operations, cost overruns or delays in transportation of drilling units, costoverruns or delays in maintenance and repairs, cost overruns or delays for conversion or upgrade projects, operating hazards and equipment failure, risks of collisionand damage, casualty losses and limitations on insurance coverage, customer credit and risk of customer bankruptcy, conditions in the general economy and energyindustry, weather conditions and severe weather in the Company's operating areas, increasing complexity and costs of compliance with environmental and other lawsand regulations, changes in tax laws and interpretations by taxing authorities, civil unrest and instability, terrorism, piracy and hostilities in our areas of operationsthat may result in loss or seizure of assets, impairments, the outcome of disputes, including tax disputes, and legal proceedings, effects of the change in our corporatestructure, and other risks disclosed in the Company's filings with the U.S. Securities and Exchange Commission. Each forward-looking statement speaks only as ofthe date hereof, and the Company expressly disclaims any obligation to update or revise any forward-looking statements, except as required by law.
CONTACT: Chris Pitre, Vice President, Investor Relations and Corporate Development, [email protected], +1 713 968 6642, Carrie Prati, Manager,Marketing and Investor Relations, [email protected], +1 713 960 7581
Exhibit 99.2
Rowan and Saudi Aramco New Offshore Drilling Company Investor Presentation November 2016 1
Statements herein that are not historical facts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected business, financial and operating performance and prospects of the Company. These forward - looking statements are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward - looking statements. Among the factors that could cause actual results to differ materially include oil and natural gas prices, the level of offshore expenditures by energy companies, variations in energy demand, changes in day rates, cancellation, early termination or renegotiation by our customers of drilling contracts, risks associated with fixed cost drilling operations, cost overruns or delays in transportation of drilling units, cost overruns or delays in maintenance and repairs, cost overruns or delays for conversion or upgrade projects, operating hazards and equipment failure, risks of collision and damage, casualty losses and limitations on insurance coverage, customer credit and risk of customer bankruptcy, conditions in the general economy and energy industry, weather conditions and severe weather in the Company’s operating areas, increasing complexity and costs of compliance with environmental and other laws and regulations, changes in tax laws and interpretations by taxing authorities, civil unrest and instability, terrorism, piracy and hostilities in our areas of operations that may result in loss or seizure of assets, the outcome of disputes and legal proceedings, effects of the change in our corporate structure, and other risks disclosed in the Company’s filings with the U.S. Securities and Exchange Commission. Each forward - looking statement speaks only as of the date hereof, and the Company expressly disclaims any obligation to update or revise any forward - looking statements, except as required by law. 2 Forward - Looking Statements
3 Joint Venture with Saudi Aramco A Strategic Partnership for the Future ▪ Rowan and Saudi Aramco will form a 50 / 50 offshore drilling joint venture The offshore drilling market in Saudi Arabia is expected to expand, creating considerable demand for drilling services ▪ Rowan benefits from : A unique and compelling opportunity to secure long - term rig commitments with the world’s leading oil and gas company Certainty of sustained high asset utilization levels, as well as better visibility into long - term cash flows and earnings through a long - term relationship with Saudi Aramco Increased near and long - term liquidity from cash distributions ▪ Saudi Aramco benefits from : Improved localization of the drilling industry in Saudi Arabia Increased efficiency and quality of drilling operations A long - term supply of fit - for - purpose jack - up rigs designed specifically for its drilling needs ▪ Minimal upfront capital investment with the potential for significant growth ▪ The new company is expected to be the leader in the Saudi Arabian offshore drilling space The new company intends to utilize internally generated funds and debt financing to fund future rig purchases Targeting the operation of a fleet of approximately 20 jack - ups by 2026 World - class driller will benefit from a combination of Rowan’s strong jack - up franchise and Saudi Aramco’s financial and contract support
4 Agenda Saudi Arabian Energy Landscape Company & Structure
5 The Saudi Arabian jack - up market is the largest in the world 4 4 6 6 7 7 8 8 11 17 22 23 36 44 4 Saudi Aramco Petrobel ConocoPhillips Chernomorneftegaz Chevron (incl. CABGOC) Vietsovpetro IOOC Pars Oil & Gas Adma - Opco PEMEX CNOOC ONGC Total Maersk Oil ZADCO 5 6 6 7 8 9 10 11 23 23 31 32 37 44 5 Ukraine USA Norway Egypt UK India Saudi Arabia Thailand Denmark Qatar Vietnam Mexico Iran UAE China Top 15 Users of Jack - ups by Customer # of jackups contracted Top 15 Users of Jack - ups by Country # of jackups contracted SOURCE: Includes data supplied by IHS - Petrodata , Inc ; Copyright 2016 as of November 1, 2016
6 The new company was initiated as part of Saudi Arabia’s “2030 Vision” and Saudi Aramco’s “In - Kingdom Total Value Add” (IKTVA) Program Source: Saudi Aramco “ There is a growing recognition around the world, especially in the developing world, that suppliers and investors must build long - term partnerships with companies and countries they do business with . They must invest in the long - term prosperity of their host nations . And they must help with long - term employment opportunities … … With our In - Kingdom Total Value Add – or IKTVA – program we now have that mechanism, which is systematic, fair, and transparent . It puts local content at the heart of our procurement process, and will be a requirement of doing business with Saudi Aramco going forward . ” Amin H. Nasser, President & CEO, Saudi Aramco K eynote S peech IKTVA Forum December 2015
7 Agenda Saudi Arabian Energy Landscape Company & Structure
Key details about the new company ( 1of 2) Scope Rowan and Saudi Aramco will form a 50/50 joint venture to own and operate jack - up drilling rigs in Saudi Arabia In 2017, Rowan contributes three rigs, related inventory and local shorebase operations; Saudi Aramco contributes two rigs, related inventory and additional cash to make up the difference in value of asset contributions between the partners. In late 2018, Rowan contributes two additional rigs as they complete their current contracts, and Saudi Aramco will contribute equivalent value . The new company will manage Rowan’s existing rigs until current contracts expire, when the new company will lease the rigs from Rowan as needed Rig Contributions and Matching Contributions Cash Capital Contributions Both partners intend for the new company to be self and externally funded. No additional equity injections are expected (although both Saudi Aramco and Rowan remain fully committed to the success of the new company). Financials and Expected Returns Both partners are committed to progressively implementing efficiencies and optimizing costs to improve profitability over time. Expected returns are commensurate to Rowan’s target for similar risk profile opportunities. 9
Key details about the new company (2 of 2) Newbuild Strategy Management Rowan will nominate CEO and head of operations; Saudi Aramco will nominate Chairman and CFO. Governance Saudi Aramco and Rowan will each own 50%, with proportional voting rights and Board representation. The new company will operate independently with a separate dedicated management team, ensuring an arm’s length relationship. The new company plans to order up to 20 rigs to be delivered over ten years beginning as early as 2021 to meet base load offshore drilling demand in the Kingdom. Rig purchases will be supported by contracts from Saudi Aramco as customer, at defined returns commensurate to similar risk profile opportunities. 10
10 The new company benefits from the partners’ unique contributions Global drilling experience , best - in - class performance and technical expertise World Class Drilling Expertise Acquire Saudi built rigs and support the training and development of a local drilling workforce Partnership in L ocal Development Demand Certainty Through a long - term relationship with Saudi Aramco Scale & Growth Benefit from economies of scale by providing Saudi Aramco with a significant portion of its rig requirements Rowan Saudi Aramco New Company 1. 4. 2. 3.
Investor Contacts: Chris Pitre VP, Investor Relations and Corporate Development [email protected] + 1 713 968 6642 Carrie Prati Manager, Marketing and Investor Relations [email protected] +1 713 960 7581 12
