Noble Agrees to Sell Rigs Clearing Hurdle for Maersk Drilling Merger
Offshore drilling contractor Noble Corporation has reached an agreement to sell five of its jack-up rigs in a step designed to clear the way for the company’s proposed merger with Maersk Drilling. News of the agreement came as UK regulators said they were delaying a decision on the merger pending the transaction. In May, the UK Competition and Markets Authority said it would be willing to review and likely accept the merger if the companies proceed with the proposed remedies to their concerns, which include the sale of several jack-up rigs.
Noble and Maersk Drilling announced plans in November 2021 for a merger of equals that they said would create a leading company with the scale, capabilities, and resources to address the changing market. The companies said the combined operation would have one of the youngest fleets in the industry and would be better suited to respond to the challenges for offshore drilling contractors serving the oil and gas industry.
The company had warned investors that it was likely that the competition review would require the possible sale of some of the combined assets. The U.K.’s Competition and Markets Authority confirmed its concerns over the potential for reduced competition if the proposed merger proceeded saying that the overlapping activities in the supply of jack-up rigs were likely to reduce completion and drive-up costs for the energy industry in the North Sea.
Under the terms of the new agreement, a newly formed subsidiary of Shelf Drilling, a Dubai headquartered operator of drill rigs, has agreed to purchase five jack-up rigs for $375 million from Noble. Founded in 2012, Shelf is a shallow water offshore drilling contractor with rig operations across the Middle East, Southeast Asia, India, West Africa, and the Mediterranean
Included in the sale are the rigs Noble Hans Deul, Noble Sam Hartley, Noble Sam Turner, Noble Houston Colbert, and Noble Lloyd Noble and all related support and infrastructure. Noble expects the associated offshore and onshore staff to transfer with the rigs as well as associated drilling contracts for other the rigs, subject to the clients' consent. Noble, however, will charter the Noble Lloyd Noble after the transfer to complete its current drilling program due to end in the second quarter of 2023.
The CMA had reported in May 2022 that “there are reasonable grounds for believing” that a sale to a suitable purchaser of the rigs together with sufficient supporting infrastructure might be accepted by the CMA to address its concerns related to the lessening of competition. Today, the CMA announced it was extending the deadline for its review because “it will not be possible to reach a decision on acceptance of the undertaking” by the July 6 deadline. Although the deadline was extended to September 1, the CMA reported that “there is a sufficient likelihood that it will be able to accept the undertaking before the end of the extended period.”
Completion of the sale of the asset to Shelf Drilling requires the CMA approval and then the merger could proceed if the CMA agrees that the asset sale has addressed the competition concerns. Anticipating that the CMA will approve, Noble said today it currently expects to launch the planned exchange offer for shares of Maersk Drilling in August 2022. In addition to the CMA approval, completion of the merger requires acceptance by holders of at least 80 percent of Maersk Drilling shares.