(Bloomberg) — Transocean Ltd. is in talks to merge with rival offshore drilling contractor Seadrill Ltd., according to people familiar with the matter, just as oil explorers around the world return to the sea.
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Shares of Seadrill rose about 10% after the close of regular trading in New York, while those of Transocean rose about 3.7%.
Discussions are ongoing about the possible structure of a combination, said the people, who asked not to be identified because the details are private. No final decision has been made on pursuing a deal and the companies may choose to remain independent, they said.
A representative for Transocean did not respond to requests for comment. A spokesperson for Seadrill declined to comment.
Transocean, headquartered in Switzerland, saw its shares fall 35% this year at the close of regular trading Wednesday, giving the company a market value of about $3.6 billion. Hamilton, Bermuda-based Seadrill was down 26% since Jan. 1, giving it a market value of $2.4 billion.
Both Transocean and Seadrill, once the world’s two largest offshore drilling companies, have fallen behind as rivals grew bigger and a prolonged downturn in offshore drilling forced many contractors into bankruptcy. Transocean, owner of the Deepwater Horizon platform involved in the blowout of BP Plc’s Macondo well in the Gulf of Mexico, was the only major offshore drilling rig contractor to avoid bankruptcy during the 2020 recession.
Offshore boom
Now offshore drilling, especially in deep water, is on the rise again thanks to stable oil prices and slower production growth from US shale fields.
Offshore drilling services provider Helix Energy Solutions Group Inc. is also exploring strategic options, including a possible sale, Bloomberg News reported this month. The Houston-based company, which has a market value of about $1.4 billion, has been working with advisors to gauge interest from potential buyers.
Major oilfield services companies are focusing on more work in international and offshore fields amid the slowdown in shale activity due to industry consolidation, low natural gas prices and pressure to control spending and return profits to be given to the shareholders.
SLB, the world’s largest oilfield services provider, sees the potential for more than $500 billion in offshore project commitments from 2023 to 2026.
