Noble and Diamond Offshore tie the merger knot with time to spare harnessing favorable consolidation winds

With positive rig market consolidation currents propelling them forward, two Texas-headquartered offshore drilling giants, Noble Corporation and Diamond Offshore, have reached a merger process finale and set the seal on their business combination sooner than anticipated.

Once the U.S. offshore drilling duo set their merger plans in action, the business combination was expected to be wrapped up by the first quarter of 2025. Things seemed to be going well with no hiccups or snags in sight, as confirmed by the expiry of the waiting period for the pending merger on July 24, 2024, under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976.

The $600 million stock plus cash transaction, which was subject to the satisfaction of the remaining customary closing conditions, collected all required approvals, rounding them off with the receipt of clearance from the Australia Competition & Consumer Commission, as the final regulatory piece of the merger puzzle.

Noble’s most recent acquisition, which came almost two years after the firm completed its business combination with Maersk Drilling in October 2022, has now been closed, enhancing its position in the global offshore rig market by creating one of the largest seventh-generation dual BOP drillship fleets in the industry and adding approximately $2 billion of backlog.

With the merger now all wrapped up, Robert Eifler, President and Chief Executive Officer of Noble, highlighted: “We are excited to close this highly strategic and accretive transaction ahead of schedule and commence our integration activities. On behalf of Noble’s board of directors and employees, I would like to welcome the Diamond organization onboard and look forward to our exciting journey ahead as a combined team.”

The addition of Diamond Offshore’s rigs enriches Noble Corporation’s fleet, expanding it to 41 rigs, covering 28 floaters and 13 jack-ups while upping the combined backlog ante to more than $6.5 billion. Following the completion of the business combination, Noble’s board of directors has appointed Patrice Douglas from the Diamond board of directors to serve as a new director in the combined company.

Charles M. (Chuck) Sledge, Noble’s Chairman of the Board of Directors, noted: “This combination marks a crucial next step in Noble’s 7G deepwater leadership strategy. We are excited to bring Diamond’s exceptional team and team on to the Noble platform and look forward to delivering valuable synergies for all stakeholders through the integration of these two great companies.”

Noble has explained that the addition of the Diamond rigs and other updates, chiefly the backlog boost of 4.8 rig years recently awarded under the commercial enabling agreement (CEA) with ExxonMobil for the firm’s four drillships operating in Guyana, increase its current backlog to $6.7 billion.

Regarding the deal with ExxonMobil, the Noble Tom Madden, Noble Sam Croft, Noble Don Taylor, and Noble Bob Douglas have been awarded 4.8 additional rig years of backlog in Guyana, which has been assigned evenly across the four drillships, extending each rig’s contract duration from June 2027 to August 2028.

As energy market analysts like Wood Mackenzie believe that the Noble-Diamond merger is the beginning of offshore rig market consolidation endeavors, more such moves are anticipated to come in the future, despite 60% of the total floater backlog being in the hands of four drilling contractors.