Paratus Energy Services Ltd. Company update

Hamilton, Bermuda, March 17, 2023 - Paratus Energy Services Ltd. (“Paratus”) today announced the completion of the sale of all of Seadrill’s ownership interest in Paratus and general business updates on Paratus, its subsidiaries, and associated companies (“Paratus Group”).

Paratus intends to release its trading update for fourth quarter 2022 in the coming days.

Completion of the Share Acquisition Transaction

On February 24, 2023, Hemen Investments Ltd (“Hemen”), an entity ultimately controlled by trusts established by John Fredriksen for the benefit of his immediate family members, funds and accounts managed by Lodbrok Capital LLP (“Lodbrok”), and Melqart Asset Management (UK) Ltd (“Melqart”) (collectively, the “Acquiring Shareholders”) have successfully completed their acquisition of all of Seadrill’s ownership interests in Paratus (the “Share Acquisition Transaction”), including Seadrill’s 35% ownership stake and its rights under the Management Incentive Fee Deed (the “MID”). As part of the Share Acquisition Transaction, the MID, which provided for a 5% fee on any proceeds arising out of liquidity events above approximately $570 million, is expected to be terminated in exchange for 22,332 shares in a new class of non-voting ordinary shares in Paratus (“C Shares”). The C Shares will represent approximately 7.25% of the pro forma share count[1]. In connection with closing of the Share Acquisition Transaction, the Paratus management services agreement will be transitioned over from Seadrill to Hemen-related entities and other affiliated group companies. Paratus will continue to build on its in-house expertise to further develop the company as a leading oil services holding company.

Updates regarding Paratus

Paratus is pleased to announce the hiring of Robert Jensen as the new Executive Director of Paratus. With more than 15 years of experience across asset management, investment banking, and research positions in global energy, oil services, and transportation, Mr. Jensen will help lead the Paratus Group in pursuing market and strategic opportunities that maximize value for stakeholders.

Paratus today also announces the appointment of a new Paratus board of directors. The new board is comprised of highly accomplished individuals with a wide range of experiences and expertise. The members of the new Paratus board are as follows:

• Mei Mei Chow (Chairperson)* is an ICAEW Chartered Accountant with over 20 years’ experience at senior and executive management levels. Most recently she has been working as an Expert Adviser with a global management consultant on international and cross border M&A projects. Ms. Chow has also spent over 10 years recently with Sapura Energy Berhad, a global oil and gas company, as a member of Sapura’s leadership team alongside the Group CEO and other top management. Prior to that Ms. Chow held various senior management positions including Divisional CFO roles, with the Sime Darby Group, a top five listed conglomerate in Malaysia.
• Robert Jensen is an Executive Director at Paratus. Prior to joining Paratus, Mr. Jensen was a Partner at Arctic Securities, a leading independent Norwegian investment bank, specializing in corporate finance transactions and advisory services. Prior to this, Mr. Jensen was a Partner at CF Partners Capital Management, an event-driven, liquid hedge fund with investments across the capital structure in the energy and natural resources value chain. Mr. Jensen has also held various roles at Sparebank 1 Markets, Clarksons Platou Securities, Jefferies International and Fearnley Offshore.
• James Ayers* is currently CEO of Front Ocean Management and Company Secretary for the affiliates of the Hemen related group of companies based in Bermuda, including publicly listed and SEC-regulated companies. Mr. Ayers currently sits as a board director of Northern Ocean Ltd. Mr. Ayers has more than ten years of industry experience with a range of director, officer and management positions across the maritime sectors.
• Lodbrok representative: In addition, the new Paratus board will also include a representative from Lodbrok, who will be appointed and announced at a later date.

* Denotes members that have served on the Paratus board since its emergence from chapter 11 in January 2022

The new board will be instrumental in helping to shape the company's long-term vision and growth. "I am honoured to be a part of this new board of directors and look forward to working with my fellow members and the leadership team to drive continued success for the company," said Mei Mei Chow, Chairperson of the board of Paratus.

Paratus owns i) five premium jack-ups in Seamex Holdings Ltd. (“SeaMex”) contracted with Pemex, ii) 50% of Seabras Sapura Holding GmbH (“Seabras”) with six pipe-laying vessels fully contracted with Petrobras, and iii) approximately 24%[2] of Archer Limited (“Archer”), a global oil services company listed on the Oslo Stock Exchange. The jack-ups and pipe-laying vessels have served their National Oil Company customers for years, which have previously led to historically strong earnings for Paratus.

The company's leadership remains focused on assessing all available options to drive long-term value for its stakeholders, including but not limited to exploration of refinancings, divestments, bolt-on acquisitions, strategic consolidations, listings and potential public and private offerings. Paratus Group has engaged Ducera Partners LLC, a leading investment bank and financial advisory firm, to support these efforts.

Updates regarding Seabras

On December 23, 2022, Seabras completed a full repayment of its secured bank debt facilities which were raised in connection with the construction of the Diamante, Topazio, Onix, Jade, and Rubi vessels (“Bank Facilities”)[3]. The Bank Facilities had an aggregate balance of approximately $1.3 billion outstanding at issuance and was scheduled to fully amortize by 2026. However, with the company's strong financial performance and cash flow generating profile, Seabras was able to fully retire the Bank Facilities more than 3 years earlier than scheduled[4]. With the repayment of the Bank Facilities, Seabras has substantially deleveraged its balance sheet and improved its flexibility to invest in growth opportunities and strengthen its market position.

Following the Bank Facilities repayment, the only outstanding third-party debt obligation is the Esmeralda vessel financing from the Brazilian Merchant Marine Fund, which has a maturity of 2032 and is collateralized by the Esmeralda vessel (“Esmeralda Facility”). The company intends to keep the Esmeralda Facility in place as it represents a highly attractive long-term source of funding, backed by the Brazilian Ministry of Transportation. The other five vessels are now fully unencumbered.

As of December 31, 2022, Seabras had a net debt position of $76 million[5], comprised of $114 million outstanding under the Esmeralda Facility and balance sheet cash of $38 million[6].

Updates regarding SeaMex

Since completion of the SeaMex restructuring through the Bermudian provisional liquidation process in November 2021, SeaMex has continued to make significant strides in deleveraging its balance sheet and improving its financial position. In 2022, SeaMex benefited from approximately $475 million of receipts from its key customer, Pemex Exploración y Producción (“Pemex”), a significant portion of which has been utilized to retire the notes outstanding under its Note Purchase and Private Shelf Agreement dated August 31, 2021(“SeaMex Notes”).

As of December 31, 2022, SeaMex had a net cash position of $31 million[5], comprised of $46 million outstanding under the SeaMex Notes and balance sheet cash of $77 million[6].

On February 3, 2023, SeaMex Finance Ltd. commenced a consent solicitation process seeking certain amendments to the SeaMex Notes, which was subsequently approved by requisite noteholders on February 13, 2023. The amendment provides SeaMex with additional financial flexibility, including a reduction of the minimum liquidity covenant to $5 million, as well as inclusion of a $50 million credit facility basket which if utilized could further bolster SeaMex’s liquidity position.

SeaMex is pleased to announce that the company is currently in the process of moving the offshore drilling operations in-house. Following a transition period which is expected to last up to 6 months, the company intends to manage and operate its wholly owned fleet of jack-up rigs on a standalone basis under its own brand later this year.

Updates regarding Archer

On March 6, 2023, Paratus subscribed to a $15.5 million equity investment in Archer as part of Archer’s broader efforts to refinance its existing capital structure (“Archer Equity Subscription”). In addition, Paratus will also convert its subordinated $15.9 million loan to Archer for new shares at an implied value of $20.0 million (collectively with the Archer Equity Subscription, “Archer Investment Transaction”). Pro forma for the Archer Investment Transaction, Paratus will increase its ownership stake in Archer from 15.5% to approximately 24%[7]. The Archer Investment Transaction is anticipated to be completed by the end of April 2023.

“Archer remains an important strategic investment for Paratus, and our recent investments reflect our ongoing confidence in Archer’s business strategy, management team, and growth prospects” said Robert Jensen, Executive Director of Paratus.