GlobalSantaFe and Transocean plan to merge
Two of the world's top oil drilling companies, Transocean and GlobalSantaFe, said on Monday that they would merge to consolidate their position in a fast-growing market.
Expanding presence: Transocean's Discoverer Enterprise is the world's largest drillship
Under the terms of the cash-and-stock transaction, shareholders of Transocean and GlobalSantaFe will receive shares in a new company as well as US$15 billion through a recapitalisation plan. The combined company, which will be called Transocean, will have a global fleet of 146 drilling rigs and 20,000 employees.
The combination gives Transocean a 20 per cent market share of drilling rigs like jack-up rigs, semi-submersibles, and drill ships.
The new company will own 48 units in the fast-growing segment of deepwater rigs able to drill in 3,000 feet of water or more. According to the consulting firm ODS-Petrodata, that would be one fewer than the combined deepwater fleets of their main rivals - Diamond Offshore Drilling, Noble, Seadrill, and Ensco International.
Energy companies are scrambling to lock in offshore rigs to drill in the current high-price environment. Drillers have been struggling to meet demand, with waiting periods sometimes stretching into years.
Analysts say that most large American drillers have been slow in expanding their fleets. Together, Transocean and GlobalSantaFe have only five rigs under construction, of a total of 138 being built.
'They are going to lose market share as a result of this rig-building boom unless they acquire some other rigs under construction,' said Tom Kellock, the head of consulting and research at ODS-Petrodata.
Given the tightness in the global drilling market, rig prices have more than doubled in recent years. They now reach US$500,000 a day at the most challenging deepwater wells in the Gulf of Mexico or West Africa.
Robert L Long, the chief executive of Transocean, who is to have a similar position at the new company, said: 'We will be positioned to better offer the full scope of drilling services to customers in all geographical areas.' Together, the merged companies have a US$33-billion backlog of contracts extending as far as 2015.
GlobalSantaFe's chairman, Robert E Rose, will serve as chairman of the successor company, and Jon A Marshall, GlobalSantaFe's chief executive, will become its president and chief operating officer.
The combination will allow Transocean to expand its presence in the Middle East and take advantage of existing contracts between GlobalSantaFe and owned oil companies including the world's biggest oil concern, Saudi Aramco.
'The combined company will have a broader customer base,' Mr Marshall said, 'particularly with the increasingly important national oil companies'.
Transocean stockholders will receive US$33.03 in cash and a 0.6996 share of the combined company for each of their shares. GlobalSantaFe shareholders will receive US$22.46 in cash and a 0.4757 share for each share they now own. The transaction provides no premium for shareholders of either company.
Transocean's market capitalisation, after the close of trading on Friday, was about US$32 billion, nearly twice GlobalSantaFe's value of US$17 billion. The new company will have an enterprise value of US$53 billion. The transaction is expected to be completed by the end of the year. Each company is to have seven directors on the new board.
Expanding presence: Transocean's Discoverer Enterprise is the world's largest drillship
Under the terms of the cash-and-stock transaction, shareholders of Transocean and GlobalSantaFe will receive shares in a new company as well as US$15 billion through a recapitalisation plan. The combined company, which will be called Transocean, will have a global fleet of 146 drilling rigs and 20,000 employees.
The combination gives Transocean a 20 per cent market share of drilling rigs like jack-up rigs, semi-submersibles, and drill ships.
The new company will own 48 units in the fast-growing segment of deepwater rigs able to drill in 3,000 feet of water or more. According to the consulting firm ODS-Petrodata, that would be one fewer than the combined deepwater fleets of their main rivals - Diamond Offshore Drilling, Noble, Seadrill, and Ensco International.
Energy companies are scrambling to lock in offshore rigs to drill in the current high-price environment. Drillers have been struggling to meet demand, with waiting periods sometimes stretching into years.
Analysts say that most large American drillers have been slow in expanding their fleets. Together, Transocean and GlobalSantaFe have only five rigs under construction, of a total of 138 being built.
'They are going to lose market share as a result of this rig-building boom unless they acquire some other rigs under construction,' said Tom Kellock, the head of consulting and research at ODS-Petrodata.
Given the tightness in the global drilling market, rig prices have more than doubled in recent years. They now reach US$500,000 a day at the most challenging deepwater wells in the Gulf of Mexico or West Africa.
Robert L Long, the chief executive of Transocean, who is to have a similar position at the new company, said: 'We will be positioned to better offer the full scope of drilling services to customers in all geographical areas.' Together, the merged companies have a US$33-billion backlog of contracts extending as far as 2015.
GlobalSantaFe's chairman, Robert E Rose, will serve as chairman of the successor company, and Jon A Marshall, GlobalSantaFe's chief executive, will become its president and chief operating officer.
The combination will allow Transocean to expand its presence in the Middle East and take advantage of existing contracts between GlobalSantaFe and owned oil companies including the world's biggest oil concern, Saudi Aramco.
'The combined company will have a broader customer base,' Mr Marshall said, 'particularly with the increasingly important national oil companies'.
Transocean stockholders will receive US$33.03 in cash and a 0.6996 share of the combined company for each of their shares. GlobalSantaFe shareholders will receive US$22.46 in cash and a 0.4757 share for each share they now own. The transaction provides no premium for shareholders of either company.
Transocean's market capitalisation, after the close of trading on Friday, was about US$32 billion, nearly twice GlobalSantaFe's value of US$17 billion. The new company will have an enterprise value of US$53 billion. The transaction is expected to be completed by the end of the year. Each company is to have seven directors on the new board.