Noble Corporation completes strategic acquisition of Diamond Offshore Drilling

Noble Corporation plc, a leading offshore drilling contractor, has officially completed its acquisition of Diamond Offshore Drilling, Inc. This strategic merger, announced in June 2024 and finalized on September 4, 2024, marks a significant milestone in the offshore drilling industry, creating the largest fleet of 7th generation dual-BOP drillships worldwide. The acquisition is expected to bolster Noble Corporation’s market position, revenue potential, and operational capabilities as the offshore drilling sector continues to recover and expand.

Key Details of the Acquisition

The deal, which received its final regulatory approval from the Australia Competition & Consumer Commission last week, involved Noble Corporation issuing approximately 24.2 million Class A ordinary shares to Diamond Offshore’s former shareholders. This issuance brings the total number of outstanding shares to around 167.3 million. Additionally, Noble Corporation assumed all outstanding and unexercised warrants of Diamond Offshore, which will be exercisable for 90 days from the date of the acquisition completion.

The acquisition adds about $2 billion in backlog to Noble Corporation, significantly enhancing its portfolio and long-term revenue visibility. With this merger, Noble Corporation now operates a fleet of 28 floaters and 13 jackups, expanding its capabilities in deepwater drilling operations. The company also gained 4.8 rig years of backlog through a recent award under the Commercial Enabling Agreement (CEA) with ExxonMobil for operations in Guyana, bringing its total contract backlog to $6.7 billion.

Strategic Implications and Future Outlook

The acquisition of Diamond Offshore Drilling is seen as a highly strategic move for Noble Corporation. The addition of 12 offshore floaters is anticipated to strengthen the company’s revenue and cash flow visibility throughout the ongoing offshore upcycle. Evercore ISI, an investment banking advisory firm, expressed optimism about the deal, highlighting the long-term benefits and enhanced market positioning it brings to Noble Corporation.

Noble Corporation’s management has expressed excitement about the completion of the acquisition and the integration of Diamond Offshore’s assets and workforce into its operations. Robert W. Eifler, President and CEO of Noble Corporation, noted that the transaction is “highly strategic and accretive” and will pave the way for enhanced synergy realization and operational efficiency in the company’s deepwater drilling segment.

Charles M. Sledge, Noble’s Chairman of the Board of Directors, echoed this sentiment, emphasizing that the merger aligns with the company’s 7G deepwater leadership strategy. Sledge welcomed Diamond Offshore’s team and assets, underscoring the importance of the merger in achieving valuable synergies and growth for all stakeholders.

Changes in Governance and Financial Outlook

Following the acquisition, Noble Corporation appointed Patrice Douglas, a former member of Diamond Offshore’s board of directors, to its own board. This move is part of the company’s broader strategy to integrate Diamond Offshore’s expertise and governance structures.

However, investors are advised not to rely on Noble Corporation’s previously issued financial guidance for 2024, as the new combined entity’s financial dynamics differ significantly from those of the standalone companies. The updated financial outlook will be recalibrated to reflect the integration of Diamond Offshore’s assets and operations into Noble Corporation’s business model.

The acquisition of Diamond Offshore Drilling by Noble Corporation represents a transformative step in the offshore drilling sector, significantly expanding the latter’s fleet, backlog, and market presence. With the integration process now underway, Noble Corporation is positioned to capitalize on the upturn in the offshore oil and gas industry, leveraging its enhanced scale and capabilities to drive long-term growth and shareholder value.

By consolidating two major players in the deepwater drilling market, this acquisition sets the stage for a stronger, more resilient Noble Corporation that is well-equipped to navigate the challenges and opportunities of the evolving energy landscape.