MONOPOLY CAPITALI$M
Noble Corp. Buys Diamond Offshore Continuing Sector Consolidation
Noble Corporation announced its third acquisition since emerging from bankruptcy as the company continues to drive consolidation in the offshore drilling sector. In a deal valued at approximately $1.6 billion, they will acquire smaller competitor Diamond Offshore Drilling to create one of the largest modern drillship fleets.
According to the companies, it will merge two highly complementary fleets to strengthen its position. After closing the acquisition by the first quarter of 2025, the combined company will own and operate a fleet of 41 rigs, including 28 floaters and 13 jackups. Noble currently operates 31 vessels which it bills as one of the youngest and most advanced fleets in the offshore drilling industry. Diamond also comes with a current $2.1 billion backlog which will give the combined company a backlog as of today of $6.5 billion reflecting the oil industry’s strengthened position and move to expand offshore resources.
Noble is highlighting significant cost savings for the combined company. They expect to realize annual pre-tax cost synergies of $100 million, with three-quarters expected to be realized within one year of closing. Diamond’s shareholders will receive stock plus cash under the definitive merger agreement and will own approximately 14.5 percent of Noble’s outstanding stock after the closing.
It will create a more “fully scaled platform,” according to Diamond’s management with more opportunities as the oil industry continues to consolidate. Several of the major oil companies have separately announced in recent months plans for acquisitions which is seen as further strengthening the industry’s recovery after a prolonged downturn.
According to the analysts at Bloomberg, buying Diamond fits Noble’s strategy of going after the biggest offshore oil contractors around the world with some of the newest deepwater rigs. They said the combined company will “boast the biggest selection of top-tier drillships.”
Four years ago, during the pandemic, Noble was the latest in a long string of drill companies to file for bankruptcy reporting it needed to shed $3.4 billion in bond debt. Shortly after emerging from bankruptcy, Noble acquired Pacific Drilling in an all-stock transaction. The deal was reported to strengthen Noble’s geographic position, including West Africa and the Mexican GoM, as well as a boost for its current footprint in the U.S. Gulf.
Eight months after announcing the merger with Pacific Drilling, Noble launched a much larger deal valued at $2 billion to combine with Maersk Drilling. It was a significant fleet expansion and drove industry consolidation, but required an agreement to sell portions of Maersk’s fleet to receive approval. It took nearly a year to close that acquisition.
Noble is highlighting that today’s transaction has been unanimously approved by each company’s board. They believe the company will be strongly positioned to meet the anticipated increases in demand for deepwater drilling to provide new sources for oil producers.
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