A planned merger of two Norwegian drilling contractors to cut costs underscores a world trend toward a declining number of drilling firms.
On May 14 the boards of Transocean AS and Wilrig AS are expected to approve an agreement for Transocean to take over all of Wilrig's properties and debts, backdated to Jan. 1 (OGJ, Apr. 10, p. 35).
The merged company will operate under the name Transocean AS from the company's current headquarters at Tananger, near Stavanger, Norway. Transocean Pres. Reidar Lund will head the merged operation.
"To compete worldwide, we needed a critical mass of assets," Lund explained. "This merger brings us into a position where we can compete worldwide. We needed to grow to be able to stay in the market in the next few years."
Lund said Transocean's absorption of Oslo's Ross Offshore AS 6 months ago has yielded savings in unit operating costs. This new merger is expected to bring further economies of scale.
"In 10 years there probably will be only four to six large drilling contractors left worldwide, along with a few operators of single rigs," Lund said.
"Today there are 10-15 large companies and a number of small ones."
Transocean will take over operation of Wilrig's six fully owned and two managed semisubmersible rigs. Transocean said the merged company will operate 21 rigs, 15 of them wholly owned.
The expanded fleet will include eight of the world's third and fourth generation semisubmersibles. Transocean currently operates three jack ups and a drillship.
The merged company will have revenues of about 3.2 billion kroner ($520 million)/year. Total stock value will be 3.4 billion kroner ($550 million), and the company will have 2,600 employees.
Under the merger agreement, shareholders of Wilrig will receive three Transocean shares for four of Wilrig's. Transocean currently has 37 million shares issued, while Wilrig has 21 million.
NAMIBIAN WELL
Among current contracts, Transocean's Pelerin drillship is preparing to spud a well on Block 1911/15 off Namibia for a group led by Norsk Hydro AS.
This will be only Namibia's second offshore well in 20 years. The first was a dry hole drilled by the same Hydro group from November 1993 to January 1994.
For the second well, Pelerin will operate in 630 m of water. Three wells have to be drilled on the license by April 1996.
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