Archer Limited : Archer Limited : Financing update, equity issue, preliminary 4Q results and SGM notice

Archer Limited : Archer Limited : Financing update, equity issue, preliminary
                          4Q results and SGM notice

Hamilton, Bermuda (January 31, 2013)

Highlights

  *Solution with banks in place, no debt installments until November 2014
  *Underwritten new equity commitment of USD 250 million
  *Fourth quarter preliminary revenue  of USD 537 million,  EBIDTA of USD  30 
    million after USD 14 million of two non-recurring provisions
  *New modular  rig contract  award  with Statoil  worth  USD 115  million  + 
    options, with  estimated  annual EBITDA  contribution  of USD  30  million 
    starting from Q4 2014

Equity issue and financing update

Archer Limited (the  "Company") has  concluded negotiations  with its  lending 
banks  and  major  shareholders  resulting  in  significantly  enhanced   debt 
covenants. The proposed  solution is contingent  on a USD  250 million  equity 
raise to be used to prepay Archer's November 2013 debt installment of USD  100 
million and the  prepayment of other  debt facilities of  USD 150 million.  In 
order to avoid  further dilution  to existing shareholders,  Seadrill will  in 
addition give a guarantee of USD 100 million to support Archer's existing bank
facilities.

The solution has been designed to mitigate financing risk with no further debt
installments on the main facility due until November 2014. This will lower the
Company's cash  break-even  levels, and  will  leave room  for  the  Company's 
planned capex investments.

Archer's five  largest shareholders  together holding  approximately 68%,  are 
supportive of the solution. The Company intends to execute a private placement
within the next  week. The private  placement is fully  underwritten by  these 
five shareholders at minimum  USD 1 per share.  The subscription price in  the 
private placement will reflect the market price at the time of launch, with  a 
minimum subscription price of USD 1 per share (equal to the Company's proposed
adjusted par value of its shares).

Preliminary estimate for fourth quarter 2012 financial results

Archer's preliminary revenue for the fourth  quarter 2012 is estimated at  USD 
537 million,  compared  to USD  551.9  million  for the  third  quarter  2012. 
Earnings before Interest, Taxes, Depreciation and Amortization, or EBITDA, for
the  fourth  quarter  2012  is  estimated  at  USD  30  million  net  of   two 
non-recurring items  totaling  USD 14  million  in Argentina  and  Alaska.  In 
Argentina we have not recognized  revenue related to 15  rigs in the month  of 
December as  we  have entered  in  contract  negotiations for  new  terms  and 
conditions starting  in  early  2013.  We expect  to  come  to  a  contractual 
agreement with our costumer  in the first  quarter. A USD  8 million loss  has 
been recognized due to nonpayment by  a costumer in Alaska. A lawsuit  against 
the money has been filed. We strongly believe that all outstanding amounts are
rightfully due.

The Company has seen an increase in activity in the United States in the first
quarter. In particular coil  tubing, wireline and  pressure pumping have  seen 
improved  utilization.  The  Company  currently  has  all  5  frac  fleets  in 
operation. All businesses are still suffering from low margins.

The platform  drilling division  will benefit  from the  modular rig  ("Archer 
Emerald") in New Zealand being on full operating rate since January 1, 2013.

The Company is pleased to announce that  it has been awarded a second  modular 
rig drilling contract from Statoil for  the permanent plug and abandonment  of 
twelve wells on the Heimdal platform.  The start of operations is expected  in 
the second half  of 2014  and the  contract duration  is 34  months with  four 
option periods of three months each.

Archer is excited to secure its first  Modular Rig contract in the North  Sea. 
The award demonstrates  the attractiveness  of the modular  rig concept  which 
combines flexibility, efficiency, short rig-up and rig-down time, making it  a 
unique proposition for our  customers both for  plug and abandonment  services 
and production drilling from fixed offshore platforms.

The total  firm period  contract value,  including start-up  phase,  operating 
phase, and decommissioning  phase is  estimated at  USD 115  million, with  an 
estimated annual EBITDA contribution of USD 30 million starting from Q4 2014.

As for  the EMT  business area,  wireline  activity in  the United  States  is 
expected to gradually recover from a slow fourth quarter, while the  integrity 
related technology offering  continues to gain  broader acceptance  displaying 
significant growth.

While the Board remains disappointed with the estimates for fourth quarter and
full year 2012 results, we are pleased to have found a financial solution  for 
Archer and  its shareholders.  The  solution in  place  will allow  Archer  to 
restore its balance sheet and fully focus on operations going forward. We  are 
cautiously optimistic by  the increasing  activity in our  US land  operations 
seen since the start of the year.  To support the next phase of the  Company's 
development the Board has  resolved to appoint a  permanent CEO over the  next 
couple of months.

Special General Meeting notice

Archer's Board of Directors will call for a special general meeting to be held
on or about February 13, 2013 (the "SGM") to reduce the par value of  Archer's 
authorized and issued  shares from USD  2.00 to  USD 1.0 and  to increase  the 
number of authorized shares from  600,000,000 to 1,200,000,000. The amount  of 
credit arising from the reduction of the issued share capital will be credited
to the  contributed surplus  account  of Archer.  Archer will  following  such 
resolutions have an authorized share capital of USD 1,200,000,000  represented 
by 1,200,000,000  shares with  a par  value of  USD 1.0  and an  issued  share 
capital of USD 366,659,120 represented by 366,659,120 shares with a par  value 
of USD 1.0.

The total number of new shares to  be issued in the planned private  placement 
will be maximum 255,000,000 shares including 5,000,000 shares as  compensation 
to underwriters. The number of new shares  will be reduced if the share  price 
appreciates prior to the planned private placement.

For further information - please contact:

Fredrik Halvorsen, Chief Executive Officer and Deputy Chairman

Christoph Bausch,Chief Financial Officer

Lars Bethuelsen, Senior Vice-President, M&A and Investor Relations


***

PLEASE NOTE: Archer announces certain  preliminary estimates of its  financial 
condition and results from operations for the three months ended December  31, 
2012. These  preliminary  financial  estimates  are  subject  to  change  upon 
completion of the Company's year-end closing procedures that will be performed
in  conjunction  with  the  preparation  of  the  Company's  annual  financial 
statements. Any such  changes could be  material. These preliminary  estimates 
are not  intended  to be,  and  should not  be  construed as  a  comprehensive 
statement of the Company's financial condition or results for the three months
and year ended  December 31,  2012. Actual results  may ultimately  materially 
differ.


This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.

------------------------------------------------------------------------------

This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.

Source: Archer Limited via Thomson Reuters ONE
HUG#1674754
 
Press spacebar to pause and continue. Press esc to stop.