Noble and Maersk expect to sell certain North Sea rigs to get merger clearance in UK

Offshore drilling contractors Noble Corporation and Maersk Drilling expect they will have to divest certain North Sea rigs to get clearance in phase 1 for their merger from the UK’s antitrust regulator.

The two rig owners announced their business combination on 10 November 2021. Since then, the merger has been unconditionally approved by the competition authorities in Brazil, Norway, and Trinidad & Tobago.

Accordingly, the only outstanding pre-closing merger control clearances are in Angola and the United Kingdom. The companies expect the competition authority in Angola to unconditionally approve the transaction during April 2022.

The merger control process for obtaining clearance in the UK remains ongoing with constructive discussions continuing between Noble, Maersk Drilling, and the UK Competition and Markets Authority (CMA) ahead of the CMA expectedly publishing their phase 1 decision on 22 April 2022.

While the CMA is yet to take its phase 1 decision, Noble and Maersk revealed on Tuesday their expectation that it would be necessary to divest certain jack-up rigs currently located in the North Sea (the Remedy Rigs) to obtain conditional antitrust clearance in phase 1 from the CMA.

The companies currently expect the remedy rigs to comprise the Noble Hans Deul, Noble Sam Hartley, Noble Sam Turner, Noble Houston Colbert, and a CJ-70 design drilling rig which, at this point, the companies believe is likely to be the Maersk Innovator, although it is possible the Noble Lloyd Noble could be required to achieve phase 1 clearance. On this basis, the companies have started to examine different options to divest the remedy rigs.

The two companies believe that the financial and strategic rationale underpinning the merger remains intact and compelling for all stakeholders irrespective of the divestment of the remedy rigs. The parties’ estimated annual run-rate cost synergies goal also remains unchanged. Further, the two do not intend to change the exchange ratio agreed between them for the purposes of the transaction.

It is worth reminding that the merger between the two offshore drilling giants has previously raised concerns with certain Noble shareholders. Earlier this week, the extraordinary general meeting of Noble shareholders to approve the merger with Maersk was scheduled for 10 May 2022.

Now, though the parties expect that they will be required to divest the remedy rigs in order to gain CMA clearance, the duration and outcome of the CMA review process remain uncertain. If the companies are able to obtain a conditional phase 1 antitrust clearance from the CMA, they expect the closing of the transaction will occur in mid-2022.

Noble and Maersk have already revealed a board of directors and a management team for the new combined company, which will become effective upon the closing of the merger.

Earlier this week, Maersk Drilling secured a 19-month P&A contract through a rig sharing agreement between TotalEnergies and Petrogas in the Dutch North Sea.