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Noble grabs first mover advantage as offshore rig market consolidation begins, says Wood Mackenzie

Published by , Deputy Editor
Oilfield Technology,

Addressing Noble Corp’s acquisition of Diamond Offshore in a US$600 million stock plus cash transaction, Leslie Cook, Principal Analyst of Upstream Supply Chain for Wood Mackenzie said, “We have been predicting offshore rig market consolidation for some time and with little appetite from owners to add new rigs as rig demand is flattening out, we believed growth would be inorganic. It therefore comes as little surprise that the first major deal in the upstream service sector has been announced. Noble has grabbed first mover advantage, and solidified is status in the top two offshore rig contractors.”

Cook continued, “With this deal, more than 60% of total floater backlog is with four drilling contractors. While we believe this will have little impact on day rates in the shorter term, we do believe that the consolidation of the market will afford rig contractors more control in the medium and long term. With day rates currently reaching US$500 000/day, this will be an ongoing concern for operators adhering to capital discipline and planning for long-term drilling programmes.”

Other notable highlights from the deal:

• Affords Noble first mover advantage in a market Wood Mackenzie expects to further consolidate

• It positions Noble in the most commercially advantageous markets

• Leverages economies of scale

• Provides a good cultural fit

• Broadens client footprint, improves access to UK and Australian markets, and strengthens Noble’s competitive position in the lucrative US Gulf of Mexico market

• Diversifies the company’s portfolio without dilution of marketability of assets

If expected synergies and costs are realised, it will increase effective utilisation and make Noble’s fleet more competitive

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