The merger of Noble and Diamond advances the consolidation of the offshore platform market

The merger of Noble and Diamond advances the consolidation of the offshore platform market
The merger of Noble and Diamond advances the consolidation of the offshore platform market

In relation to the acquisition of Diamond Offshore by Noble Corp In a transaction of $600 million in shares plus cash, Leslie Cook, principal upstream supply chain analyst at Wood Mackenzie, said: “We have been predicting consolidation of the offshore rig market for some time and with little appetite from of owners to add new platforms, as demand for platforms is flattening, we believed growth would be inorganic. Therefore, it is not surprising that the first major operation in the upstream services sector has been announced. “Noble has gained first-mover advantage and has consolidated its position among the top two offshore platform contractors.”

Platform fleet size and composition of the top five floating platform contractors

With this agreement, more than 60% of the total float portfolio is in the hands of four drilling contractors. While Woodmac believes this will have little impact on daily rates in the short term, it is thought that market consolidation will allow rig contractors greater control in the medium and long term. “With daily rates currently reaching 500,000 dollars/day, this will be a constant concern for operators who adhere to capital discipline and plan long-term drilling programs,” he added.

Wood Mackenzie analysts believe there are other highlights of the deal. Firstly, it gives Noble a first-mover advantage in a market that Wood Mackenzie expects to continue to consolidate and positions it in the most commercially advantageous markets.

In addition, Cook believes that the operation will allow for taking advantage of economies of scale and provides a good cultural fit between both companies.

But the advantages do not end there, as the merger expands the customer footprint, improves access to the British and Australian markets and strengthens Noble’s competitive position in the lucrative US Gulf of Mexico market.

Another notable aspect is that it diversifies the company’s portfolio without diluting the marketability of the assets and if the synergies and expected costs materialize, it will increase effective utilization and make Noble’s fleet more competitive.

 
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