Milbank Leads in $692 Million Drillship Deal

Thursday, December 15, 2011

Milbank Represents Group of International Lenders in $692 Million Financing for New Deep Sea Drilling Ship Purchased by Brazil’s Schahin Group. Black Diamond 1 to be built by Samsung and leased to Petrobras for 10-year exploration of Brazil’s offshore oil and gas reserves; lender group from Asia, Europe, US.

 

In one of the most significant cross-border financings involving Brazil’s offshore energy sector this  year, Milbank, Tweed, Hadley & McCloy LLP has represented a consortium of major international lenders providing a US$692 million debt facility for the purchase of the Black Diamond I deepwater drillship by Schahin Group.  The Brazilian energy and construction conglomerate is purchasing the drillship – to be built by Korea’s Samsung Heavy Industries – and will then charter it to Brazil’s Petrobras (Petróleo Brasileiro SA).  Schahin Group has also entered into an operating agreement with Petrobras.  Milbank advised joint lead arrangers The Export-Import Bank of Korea (Kexim), Mizuho Corporate Bank, WestLB AG and Standard Chartered Bank – along with a group of five other lenders from Europe and Asia.


A series of recent offshore discoveries by Petrobras have catapulted Brazil to the front ranks of energy-rich nations – industry watchers project that the country could become the world’s fourth-largest oil producer over the next decade.  The Black Diamond I drillship – vital in the pursuit of capturing deepwater oil and gas reserves – has the capacity to operate in sea depths up to 3,000 meters (9,800 feet), and drill to a depth up to 10,000 meters, including area beneath the seabed (32,800 feet).
 

Milbank project finance partner Daniel Bartfeld led the firm’s representation, along with project finance senior associate Roland Estevez and associates Anne Shutkin, Alyssa Frederick and Jeeseon Ahn. “International interest in the Brazilian offshore sector remains very strong, as major new fields continue to be identified, solidifying Brazil’s importance as a critical source of global energy for decades to come,” Mr. Bartfeld said.  “We are pleased to work with some of the world’s leading international institutions in the financing of a new drilling rig to be used by Petrobras.  The transaction highlights that leading lenders such as KEXIM, Mizuho, Standard Chartered, WestLB and the others have strong capacity for financing well-structured projects in Brazil’s offshore energy sector.”


Mr. Estevez added, “The international lending community is keenly interested in supporting major energy projects throughout Latin America, and nowhere is that appetite more acute right now than in Brazil.  This deal, involving several of the key energy players in the country, is another example of Milbank’s ability to help leading Brazilian companies raise significant capital.”
 


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