Energy acquisition news : Transocean, a Swiss offshore drilling contractor, has agreed to acquire its peer Ocean Rig, a Greece-based operator of semi-submersible oil rigs and UDW drillships, for $2.7 billion in a cash-cum-stock deal.

Transocean acquisition of Ocean Rig is expected to help the Swiss firm bolster its fleet of ultra-deepwater and harsh-environment floating rigs.

Ocean Rig’s fleet features nine high-specification ultra-deepwater drillships and a couple of harsh-environment semisubmersibles. Apart from that the fleet will also have two more high-specification ultra-deepwater drillships that are being constructed by Samsung Heavy Industries.

Commenting on Transocean acquisition of Ocean Rig, Jeremy Thigpen – Transocean President and CEO, said: “The proposed acquisition of Ocean Rig provides us 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.

“The combination of constructive and stable oil prices over the last several quarters, stream-lined offshore project costs, and undeniable reserve replacement challenges has driven a material increase in offshore contracting activity.

“As such, adding Ocean Rig’s premium assets to our industry-leading fleet provides us with an increased number of the modern and highly efficient ultra-deepwater drillships preferred by our customers, and better positions us to capitalize on what, we believe, is an imminent recovery in the ultra-deepwater market.”

As per the terms of the Transocean acquisition of Ocean Rig, the Greek rig operator’s net debt of $397 million will be assumed by the Swiss offshore drilling contractor.

Transocean will issue 1.6128 of its newly issued shares along with $12.75 in exchange of each share of the Greek offshore drilling contractor, which gives an implied value of $32.28 per Ocean Rig share.

The Swiss offshore drilling contractor plans to cover the cash portion of the deal with cash on hand and also through financing from Citi.

Upon completion of the Transocean Ocean Rig merger, shareholders of the Swiss offshore drilling contractor will own a stake of around 79% in the enlarged company, while the remaining 21% stake or so will be owned by shareholders of the Greek firm.

Pankaj Khanna – President and CEOof Ocean Rig, commenting on Transocean acquisition of Ocean Rig, said: “This strategic combination of Ocean Rig and Transocean creates a world-class fleet perfectly positioned for the market recovery while reducing fragmentation that currently exists in offshore drilling.

“By adding our high-specification floaters to Transocean’s industry-leading fleet, the combined company will have the offshore industry’s largest and most technically capable fleet of ultra-deepwater and harsh environment floaters. Upon consummation, this transaction will be of significant benefit to the stakeholders of both companies.”

The Transocean Ocean Rig merger will be based on approvals of shareholders of the companies, meeting of customary closing conditions and receipt of regulatory approvals, following which it is likely to be wrapped up in Q1 2019.

Transocean acquisition of Ocean Rig marks the second major acquisition of the Swiss offshore drilling contractor in 2018 with the first one being the $1.2 billion acquisition of Songa Offshore, an international midwater drilling contractor based in Norway.

In May, the Swiss offshore drilling contractor acquired a stake of 33.3% in the West Rigel semi-submersible rig for $500 million, which is being constructed by Sembcorp Marin’s Jurong Shipyard.

  Greece, Jeremy Thigpen, Ocean Rig, Offshore drilling contractor, Pankaj Khanna, Switzerland, Transocean