SembCorp to Absorb Sevan Marine

Norwegian contractor Sevan Marine announced June 8 it has agreed to sell all its intellectual and LNG business to Singapore’s Sembcorp Marine (SCM) in a bid to end a legal dispute between the two.

“The scope and scale of Sevan Marine’s operations will be substantially reduced,” said the Oslo-listed company, adding that Sevan will sell for US$28mn interests and title to all of Sevan Marine’s intellectual property and proprietary business, 26 employees, its 95% shareholding in HiLoad LNG, and certain other assets. Proceeds would be largely returned to shareholders, it said of the deal reached on June 7, adding that shipowner Teekay Corp – which owns 43.5% of Sevan Marine – backed the deal.

Sevan Marine will retain income from the Dana Western Isles licence agreement (oil development) but income from the Shell Penguins licence agreement (gas development) would transfer to Sembcorp Marine; both fields are offshore the UK.

Sevan Marine has the right to terminate the transaction, if it gets an offer at least 10% better than the $28mn, while SCM shall have the right but not an obligation to match any such offer.

CEO Reese McNeel has agreed to stay for a further 12 months at Sevan Marine, following completion of the deal which is expected in 3Q 2018, after which he will earn a kroner 1.5mn ($186,000) success fee.

Sevan Marine had high hopes of selling its proprietary cylindrical hull design to Chevron for the Rosebank oil field, and more recently HiLoad design to ExxonMobil for a Scarborough floating LNG project. Neither culminated in a deal. Exxon this year divested its Scarborough stake to Woodside which has no plans to use HiLoad.

SCM noted that, if Sevan Marine terminates the arrangement, it will reimburse SCM reasonable transaction; in that event, litigation between SCM and Sevan Marine in the US courts "over the infringement of Sembcorp Marine’s intellectual property rights will then continue."