The world's largest jack-up rig owner is born!

2018-10-11 09:00

Ensco and Rowan, two offshore drilling companies, recently announced a fully-stock merger agreement. Under the agreement, the two companies will merge to form a company with 82 offshore drilling rigs, becoming the offshore drilling company with the widest global operational reach and surpassing Transocean to reclaim the title of world's largest offshore drilling company.

According to the agreement, Rowan shareholders will receive 2.215 Ensco shares for each Rowan share held. After the merger, Ensco and Rowan shareholders will own 60.5% and 39.5% of the merged entity's outstanding shares, respectively. The transaction is not subject to financing conditions.

Based on the closing prices of both companies' stocks on October 5th, the merged company is valued at $12 billion. Synergies are expected to generate annual cost savings of $150 million, primarily from overlapping corporate and regional functions, supply chain efficiencies, and standardization of systems, policies, and procedures across the organization.

In a statement on October 8th, the two companies stated that the merger will combine complementary businesses, creating a leading offshore drilling company in terms of fleet size, geographic reach, and customer base. This will encompass 82 offshore drilling rigs spanning six continents, serving over 35 clients, including major national oil companies, international giants, and independent exploration and production companies.

Rowan's CEO, Tom Burke, will serve as CEO of the merged company, while Ensco's CEO, Carl Trowell, will serve as Executive Chairman.

The new merged company will reportedly own 28 floating drilling rigs (semi-submersible rigs and drillships) and 54 jack-up rigs. This includes two drillships and one jack-up rig currently under construction, but excludes rigs under Rowan's Saudi Arabian joint venture, ARO Drilling.

Among the 28 floating drilling rigs, 25 are ultra-deepwater rigs capable of operating in water depths exceeding 7,500 feet, with an average age of 6 years, making it one of the youngest and most capable fleets in the industry.

Additionally, the merged fleet will include 11 seventh-generation ultra-deepwater drillships, representing the second-largest fleet of this highest specification in the industry.

Of the 54 jack-up rigs, 38 are equipped with "many advanced features demanded by shallow-water drilling clients," such as increased leg length, extended cantilever reach, and greater lifting capacity. The merged jack-up rig fleet includes seven rigs suitable for operation in ultra-harsh environments and nine rigs suitable for operation in harsh environments.

Almost a year ago, in October 2017, Ensco completed the acquisition of Atwood Oceanics, becoming the world's largest jack-up rig operator at the time.

Just one month prior, Ensco's competitor, Transocean, announced it would acquire Ocean Rig in a $2.7 billion deal. It is worth noting that earlier this year, Transocean also completed the acquisition of floating drilling rig operator Songa Offshore.

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