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Asia Offshore Surges as Seadrill Bets on Jack Ups: Oslo Mover

Oct. 26 (Bloomberg) -- Asia Offshore Drilling Ltd. rose the most in five months in Oslo trading after Seadrill Ltd. said it would seek to buy the owner of three jack up rigs.

Asia Offshore rose 17 percent, the most since May 16, trading at 28.7 kroner as 1:07 p.m. in the Norwegian capital, valuing the company at 1.1 billion kroner ($190 million).

Seadrill, the oil-rig company controlled by billionaire John Fredriksen, bought 12.19 million shares at $5 apiece, raising its stake to 64.23 percent, according to a statement today. The company will now make a mandatory cash offer for the remaining shares, Seadrill said.

Asia Offshore said yesterday it won its first drilling contract for one of its three rigs under construction. It sees revenue of about $197 million for the three-year period starting June 2013 as well as a $39.5 million mobilization fee, it said in a statement yesterday. A jack-up rig has extendable legs that allow it to stand on the ocean floor.

The price of Seadrill’s share acquisition implies a yard cost of $195 million to $200 million per rig, analysts at Pareto Securities ASA wrote in an e-mailed note to clients. Asia Offshore ordered its third rig for $184 million in July 2011, the company said in a statement last year.

Seadrill is expanding its fleet as oil companies boost offshore exploration spending. It bought a 34 percent stake in Asia Offshore in July 2011 after a takeover of Scorpion Offshore Ltd. in 2010.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net

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