OSLO (Reuters) - Shipping tycoon John Fredriksen announced on Wednesday plans to move management at Seadrill SDRL.OL out of Norway, prompting the chief executive of the world’s biggest deepsea drilling rig owner to leave and opening a new chapter in Fredriksen’s controversial love-hate relationship with his former homeland.
Seadrill said it is looking at several alternative locations for its central management, with London, Dubai, Singapore and Houston under consideration after concluding that its current base in Stavanger, the Norwegian oil industry’s capital on the west coast, is too expensive and too remote for a company seeking to do business globally.
“Stavanger may constrain Seadrill’s aggressive growth plans, for which access to qualified personnel is critical,” the firm said. “The Norwegian cost level and distance from Seadrill’s core markets makes travel and logistics cumbersome when managing world-wide operations.”
Chief Financial Officer Rune Magnus Lundetrae added: “We have a lot of oil and offshore competence in Norway but we are doing some complex capital transactions globally and that sort of expertise is not the easiest to find in Norway.”
Seadrill’s chief executive Alf Thorkildsen disagreed with the step and announced his departure, to be replaced by Fredrik Halvorsen, a key executive at two Fredriksen companies, well services firm Archer (ARCHER.OL) and Frontline (FRO.OL).
“The message from the company was clear that they are considering moving and this should be priority number one,” Thorkildsen was quoted as telling Norwegian online news portal E24. “So I decided it was time to go.”
Thorkildsen was reported as saying that Norwegian costs were indeed very high but Fredriksen’s “attitude” to Norwegian authorities was a factor.
Thorkildsen was unavailable for immediate comment.
Oslo-born Fredriksen, known as “Big Wolf” for his bold business deals, has been in dispute with the Norwegian authorities for years and has traded his citizenship for a Cypriot passport, calling the move an “escape”.
He now lives in London but often criticises the government of his former homeland, where he was once detained for several months during a fraud investigation before being cleared of wrongdoing.
“Thorkildsen going is clearly a loss for Seadrill,” Swedbank analysts Sondre Dale Stormyr said. “He has delivered well since coming to the firm with the acquisition of Smedvig in 2006.”
Seadrill, which has a market capitalization of $18.8 billion, has been on an aggressive expansion spree in recent years, moving into markets such as Brazil and North America and growing its fleet to 67 drilling units, including 19 under construction.
“We believe it may take some time for the market to warm to Halvorsen, who has been at Archer since October 2010, at a time when the company has struggled and the share price has lost over 80 percent since early 2011,” Bank of America Merrill Lynch said in a note.
Seadrill said the move was more evolution than disruption and having headquarters in Stavanger for a company with Seadrill’s international scrope was now a drag.
“There is no drama here; he (Thorkildsen) developed the company from more or less nothing to become the world’s largest rig company ... and this is now a natural development,” Lundetrae said.
Shares in Seadrill were down 0.5 percent at 226.8 crowns by 1342 GMT.
“London would seem the most natural choice,” Nordea Markets analyst Davis Bhatti said.
“Stavanger is mentioned as a place where it is difficult to obtain qualified staff and is expensive to operate from.”
Norway’s economy has been a rare economic standout amid Europe’s meltdown thanks to its oil and gas industry, which accounts for a fifth of the economy.
The boom has cut unemployment to 3 percent but pushed wages higher with the average oil worker now earning $180,000 a year, the highest in the world, and $93,000 more than workers on the UK side of the North Sea, according to data from recuitment firm Hays (HAYS.L).
Additional reporting by Thyagaraju Adinarayan in Bangalore; Writing by Balazs Koranyi; Editing by Greg Mahlich