Texas-based offshore drilling contractor Noble Corporation has taken steps to bring land-based drilling rig owner Diamond Offshore into its fold, which will result in a US-based offshore drilling heavyweight with a fleet of 41 rigs and a combined backlog of $6.5 billion. .
The rig owner duo has entered into a definitive merger agreement under which Noble will acquire Diamond in a stock-plus-cash transaction, allowing the latter’s shareholders to receive 0.2316 shares of the former, in addition to a cash consideration of $5.65 per share for each share of Diamond stock.
This represents an 11.4% premium over the closing share prices on June 7, 2024. Once the merger is completed, Diamond shareholders will own approximately 14.5% of Noble’s outstanding shares. Following the acquisition, Noble will own and operate a fleet of 41 drilling rigs 28 floats And 13 jackupswith a combined backlog of approximately $6.5 billion.
Robert EiflerPresident and Chief Executive Officer of Noble, commented: “This acquisition enables Noble to continue our journey of delivering superior innovation and value to a wide range of leading offshore operators around the world. Our position is strengthened with the addition of four 7se generation of drillships and one of the highest quality semi-submersible drilling platforms in the world.
“In addition, Diamond’s five conventional deep and midwater platforms have had an average utilization rate of more than 85% over the past three years and currently have strong contract coverage. Backed by Diamond’s $2.1 billion backlog and $100 million in expected cost synergies, we expect the transaction to be immediately accretive to our free cash flow per share and contribute to accelerated growth of our capital return to shareholders.”
While explaining the rationale behind the merger, Noble emphasized that the acquisition would enable its 14 operating and 15 total seventh-generation twin BOP drillships to consist of “the industry’s leading drillship fleet.”
The addition of the Ocean Great White The semi-submersible drilling platform added to its fleet would provide the company with a high specification float that can operate in harsh environments. In addition, the remaining five semi-submersibles are expected to contribute meaningful contracted cash flow.
Bernie WolfordPresident and Chief Executive Officer of Diamond, commented: “This combination is an ideal outcome that provides Diamond shareholders with both immediate and long-term upside potential as part of a more fully scaled platform that can deliver customer and shareholder value on a cycle basis, more visible and accessible, while gaining access to The Noble’s robust dividend program.
“Noble’s operational strength, service focus and proven integration capabilities make this a natural fit for Diamond. I would like to thank the entire Diamond team for delivering great results for our customers and shareholders. Your daily commitment to our uncompromising standards is a perfect fit for Noble.”
Under Noble’s plans, the cash portion of the acquisition will be funded through new debt financing, which the company has secured through a committed $600 million bridge financing facility. Upon completion of the acquisition, the company’s board of directors will be expanded with one member of the Diamond Board.
While the boards of directors of both players have unanimously greenlighted the merger, the transaction is subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals and the approval of Diamond’s shareholders. This merger is expected to be completed in the first quarter of 2025.
Noble has secured several new jobs in recent months and expanded existing work, including the long-term assignment at Murphy oil in the Gulf of Mexico, a recent deal with Portwhich came after the offshore drilling player secured a contract in Spain for plug-and-abandon (P&A) activities, following multi-million dollar orders in the first quarter of 2024 for its drilling rig fleet.
Diamond Offshore has also secured more work for its rig fleet and acquired the marketing rights for three seventh-generation drillships to market the rigs in Brazil, Latin America, West Africa, Malaysia and Indonesia. In addition, the US player agreed to commercialize another oil rig in the US Gulf of Mexico.
The announcement of Noble’s acquisition of Diamond Offshore comes almost two years after the company completed its business combination with Noble Maersk drilling in October 2022.
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