Maersk-Noble merger to form world's 3rd largest rig owner
The merger of offshore drilling companies Maersk Drilling and Noble Corp is due to create the third largest rig fleet in the world after China Oilfield Services and Valaris, analysts at Westwood Global Energy said in a research note on November 13.
Maersk and Noble announced on November 10 they had entered into a definitive agreement to merge, creating a fleet of 39 rigs. The merger is due to be completed in mid-2022, and the combined company will be named Noble Corp and listed on the New York and Copenhagen stock exchanges.
The all-stock deal will allow Maersk Drilling shareholders to exchange each share in that business for 1.6137 shares in the new company, although they can also opt to receive cash. Once the deal is completed, Maersk Drilling and Noble will each own 50% of the combined entity.
"Both companies share. very strong conviction in the compelling industrial logic behind the creation of a world class offshore driller with the scale, capabilities, and resources to successfully serve a broad range of customers," the companies said in a statement announcing the deal. "The combined company will have a modern, high-end fleet of floaters and jack-up rigs across benign and harsh environments able to meet the needs of customers in the most attractive oil and gas basins."
The combined entity is expected to generate $125mn in annual run-rate synergies, benefiting from "a diverse revenue mix, a robust contract backlog with significant earnings visibility, a solid balance sheet, and a strong free cash flow potential, supporting the potential for return of capital to shareholders while provide resilience through the cycle."
The board of directors of both companies have unanimously approved the deal. APMH Invest, which owns 42% of Maersk Drilling, also supports the deal, as do foundations linked to APMH Invest with around a 12% share of the business. Likewise, Noble's three shareholders with a combined interest of 53% are backing the merger, although another large shareholder, Standard Drilling, said it was "concerned about the proposed exchange ratio and will consider to vote against the transaction."
Westwood said the merger "came as no surprise," noting that it had been rumoured for the past few months. The combined rig fleet will boast a market utilisation of 100%, with an average dayrate of $223,776, an average rig age of 8.1 and a contract backlog of 6,617 days.