KUALA LUMPUR (Aug 30): Icon Offshore Bhd is set to offload a jack-up rig to Saudi Arabia-based ADES Arabia Holding for RM381.65 million, which is more than double the price paid by the company to buy it 22 months ago.

This confirms The Edge's report last Friday (Aug 26) that the offshore support vessel provider and offshore drilling rig contractor had received an offer from a foreign buyer to buy the jack-up rig.

In a statement on Tuesday (Aug 30), Icon Offshore said its wholly owned subsidiary Icon Caren (L) Inc has entered into an agreement with ADES for the disposal of jack-up rig Perisai Pacific 101.

The company noted that the disposal consideration of RM381.65 million is double the RM177 million it spent to purchase the jack-up rig from Perisai Petroleum Teknologi Bhd in October 2020.

Of the RM381.65 million proceeds, Icon Offshore said it has ring-fenced RM159.2 million for the redemption and discharge of the existing mortgage over the rig, earmarked another RM208.61 million for general corporate purposes and working capital requirements, and set aside the remaining RM13.84 million for the estimated expenses of the disposal.

Commenting on the proposed disposal, Icon Offshore managing director Datuk Seri Hadian Hashim said it presents an opportunity for the company to monetise the investment in the rig at a significant profit — RM185.5 million.

He added that this will provide Icon Offshore the financial strength to diversify into other business areas, such as new energy space and service segment, through strategic mergers and acquisitions.

Looking back, Hadian said that the acquisition of the rig enabled the company to pivot into the offshore drilling business at a highly favourable price, which was subsequently impacted favourably by the increase in oil prices driven by multiple global events.

However, Hadian said that while he is cognisant that the oil price development would continue to have a positive impact on Icon Offshore's overall financial performance, the company's initial strategy to scale up its presence in the drilling segment via further asset ownership is increasingly challenging to execute as asset prices have increased significantly.

"Coupled with continued volatility in the sector, it necessitates the reassessment of its initial strategy with regard to assets expansion," he said.

Icon Offshore said that it remains confident in solidifying its position as a preferred integrated service operator to meet the diverse needs of oil and gas majors by leveraging its technological innovation, low-cost base and solid health, safety, security and environment track record.

The company said the disposal is subject to its shareholders' approval at an upcoming extraordinary general meeting.

"Subject to all approvals being obtained, the proposed disposal is expected to be completed in the fourth quarter of 2022," it added.

Shares in Icon Offshore closed unchanged at 11 sen on Tuesday, giving the company a market capitalisation of RM285.14 million.