Transocean buys rival Ocean Rig in $2.7bn deal as oil prices continue to rise
Drilling rig contractor Transocean has agreed to acquire deepwater rival Ocean Rig in a deal worth $2.7bn (£2.10bn).
The cash and stock deal, which includes Ocean Rig's debt, will result in a combined fleet of 57 floaters, with 31 of the top 100 ultra-deepwater drill ships in the industry.
The deal comes as oil prices continue to rise towards $80 per barrel.
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Transocean's president and chief executive, Jeremy Thigpen, said it was this recovery that led to the acquisition.
“The combination of constructive and stable oil prices over the last several quarters, streamlined offshore project costs, and undeniable reserve replacement challenges has driven a material increase in offshore contracting activity," he said.
“As such, adding Ocean Rig's premium assets to our industry-leading fleet provides us with an increased number of the modern and highly efficient ultra-deepwater drill ships preferred by our customers, and better positions us to capitalise on what, we believe, is an imminent recovery in the ultra-deepwater market.”
Oil prices jumped even higher yesterday, with Brent Crude up to $78.8 per barrel, after the evacuation of two Gulf of Mexico oil platforms in preparation for a hurricane expected to hit the Gulf Coast.
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Once the deal is completed Transocean shareholders will own 79 per cent of the combined company, while Ocean Rig shareholders will hold the remaining 21 per cent.
Transocean will acquire Ocean Rig's nine ultra-deepwater drill ships, two harsh environment semi-submersibles and two more ultra-deepwater drill ships currently under construction.
Citi was Transocean’s financial adviser, while Credit Suisse Securities advised Ocean Rig.