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Transocean to acquire Ocean Rig
Transocean has unveiled plans to merge with Ocean Rig in a $2.7bn deal that is expected to secure annual cost synergies in the region of $70mn.
The acquisition will add nine high-specification ultra-deepwater drillships, two harsh environment semisubmersibles, and two high-specification ultra-deepwater drillships currently under construction to Transocean’s portfolio. The two newbuilds are due to be delivered in 3Q2019 and 3Q2020 respectively. As a result, the merged operation will have a fleet of 57 floaters, with 17 of the top 50 and 31 of the top 100 ultra-deepwater drillships in the industry (according to Transocean’s internal rig ranking model).
A winning deal
Commenting on the deal, Leslie Cook, Principal Analyst, Upstream Supply Chain, Wood Mackenzie, says: ‘The purchase of Ocean Rig is in line with Transocean’s strategy to have the number one fleet of premium ultra-deepwater and harsh environment rigs. The announcement is not a surprise. Industry consolidation is necessary to get these premium assets back to work over the next two to three years. The Ocean Rig fleet aligns very well with Transocean's best-in-class portfolio.’
She adds: ‘It is Wood Mackenzie’s view that the premium ultra-deepwater drillship market has reached the bottom and rates for some of the highest-spec assets have the potential to double in the next couple years as active utilisation begins to tighten. Operators are already demonstrating a preference for newer rigs that offer greater efficiency in their drilling programmes. As rates begin to float back up, the need to keep drilling costs down will drive demand for these newer rigs that can offer efficiency gains. By buying Ocean Rig, Transocean is positioning itself to offer the industry premium rigs at competitive day rates. This is a winning deal – for Transocean, for Ocean Rig and for the industry.’
News Item details
Journal title: Petroleum Review
Subjects: Banking, finance and investment, Economics, business and commerce, Drilling, Deep water drilling, Exploration and production, Offshore drilling, Mergers and acquisitions