Houston – The world’s largest offshore drilling contractor got bigger with Monday’s announcement by Transocean that it will combine with GlobalSantaFe, creating a company able to drill globally from shallow to ultra-deep waters.
Analysts largely applauded the coupling and said more combinations could be forthcoming. The shares of both companies rose.
The deal, announced jointly by both Houston-based companies, includes a $15 billion cash payout to shareholders of both the world’s largest contractor, Transocean Inc., and GlobalSantaFe Corp.
Shareholders of both companies will also get shares in the new company, which will retain the Transocean name and trade on the New York Stock Exchange under Transocean’s symbol “RIG.”
The value of the new company will be about $53 billion, including debt. The $15 billion for the cash payout to shareholders will be funded through a bridge loan due one year after closing.
Transocean chief executive Robert Long, who will continue as CEO of the combined company, said the deal will allow the company to keep pace as the industry expands and to “assure us of a leading presence in almost every major offshore drilling province in the world.”
“We’ll also benefit from economies of scale leading to cost reduction,” Long said in a conference call. The company said the reduction could amount to $100 million to $150 million a year by 2010.
GlobalSantaFe chief executive Jon Marshall will serve as president and chief operating officer of the combined entity, while GlobalSantaFe chairman Robert Rose will be chairman. The companies will be equally represented on a new 14-member board.
Marshall said the combination gives the new Transocean a broader customer base, particularly with state-owned national oil companies, which control almost 90 percent of global oil reserves.
It also will give Transocean greater exposure in the growing and lucrative deep-water drilling market.
The combined company will have a global fleet of 146 rigs, including harsh-environment jackups for shallower waters and ultra-deep-water drill ships. Oil companies are heading for deeper waters worldwide as the competition to find new sources of hydrocarbons intensifies.
