Switzerland-based Transocean Ltd. and Cayman Islands' Ocean Rig UDW Inc. announced their merger Tuesday under which Transocean will acquire Ocean Rig in a $2.7 billion cash and stock transaction that includes Ocean Rig’s net debt.
Transocean is a leading international provider of offshore contract drilling services for oil and gas wells, while Ocean Rig is an international offshore drilling contractor providing oilfield services for offshore oil and gas exploration, development and production drilling. Ocean Rig specializes in the ultra-deepwater and harsh environment segment of the offshore drilling industry.
Upon merger completion, Transocean's and Ocean Rig's shareholders will own approximately 79 percent and approximately 21 percent, respectively, of the combined company.
Transocean President and Chief Executive Officer Jeremy Thigpen said the proposed acquisition of Ocean Rig provided them with 'a unique opportunity to continue enhancing our fleet of ultra-deepwater and harsh environment floaters, without compromising our liquidity or overall balance sheet flexibility'.
Thigpen said the merger further strengthened Transocean's relationships with strategic customers, while expanding its presence in the key markets of Brazil, West Africa and Norway.
'It also enables us to reduce our cost per active rig, as we believe that we can efficiently merge the Ocean Rig operations into our existing structure with limited incremental shore-based expense,' he added.
'Including the five rigs under construction, and considering the two additional rigs that we have recently decided to recycle, Transocean’s pro forma fleet will be comprised of 57 floaters, including many of the most technically capable ultra-deepwater floaters, and harsh environment semisubmersibles in the industry.
'With this unparalleled fleet, the offshore drilling industry's largest and most profitable backlog totaling $12.5 billion, and approximately $3.7 billion in liquidity, we are well-equipped for the market recovery,' he concluded.
Ocean Rig President and CEO Pankaj Khanna said this 'strategic combination' created 'a world-class fleet perfectly positioned for the market recovery while reducing fragmentation that currently exists in offshore drilling'.
The transaction, which is expected for completion during the first quarter of 2019, is subject to the approval of both Transocean and Ocean Rig shareholders and the successful completion of customary closing conditions, including regulatory approvals.
By Hale Turkes