The Merger Between Ensco and Rowan Will Change the Entire Offshore Drilling Industry

The Offshore Rig Market Needed Consolidation, and It Got It in a Mega Dose. Ensco and Rowan Just Created the Mother of All Offshore Drilling Equipment Owners

The offshore rig market needed consolidation, and it got it in a mega dose. The merger between Ensco and Rowan will change the entire offshore drilling sector. If Ensco aimed to become the world’s most powerful owner of offshore platforms, they almost achieved that today with the merger deal with Rowan in a stock transaction. The company will operate 28 floating platforms and 54 jackups.

After taking the first step toward market consolidation last year with its acquisition of Atwood, Ensco decided they were ready to execute a supersized deal. Rowan offered them just that.

Ensco has not become the largest drilling asset owner. They are acquiring one of the most interesting and globally-reaching offshore equipment fleets on the market with Rowan. They are obtaining the coveted joint venture ARO Drilling with Saudi Aramco (which owns seven other jackups and will build 20 more). They are gaining synergies, economies of scale, and more control over an industry that has suffered from an excessively fragmented landscape and the desire of oil companies to cut costs.

What’s Next for the New Ensco?

The only thing that Ensco did not obtain from this deal is access to semisubs in harsh environments. If there’s a place you want to be now (and in the future), it’s in the North Sea floating rig market, with the imminent shortage of rigs and the prospect of much higher entry rates.

As soon as Ensco streamlines its new fleet, we wouldn’t be surprised to see them enter the segment.

And as part of its fleet rationalization process, we expect more scrapping and possibly new acquisitions of smaller rigs. Two of the jackups still listed in Rowan’s fleet, for example, the Rowan California and the Gorilla IV, should already be removed from the combined fleet (they are not counted in the 54 jackups that Rowan referred to and will likely be sold soon). Ensco has at least four older jackups that could also be retired soon.

What Does This Mean for the Rest of the Industry?

This means that if you want to continue competing, you’ll need to do something. As certain platform owners become larger or more specialized (such as Ensco and Transocean), others will find it hard to maintain competitiveness due to their smaller size.

Everyone knew that the offshore platform industry needed to consolidate, and it has been a relatively slow process so far. But every time this happens, it pushes further away those who are not participating.

As the largest players gain the size to justify discarding, they set a higher standard for specifications, equipment, and efficiency that will allow them to continue building an edge over others.

We hope that deals like those we’ve seen from Ensco, Transocean, Borr, and Northern Drilling (along with Seadrill) will not only attract but force platform owners to rethink their strategy and become more proactive in an ever-changing industry.

The offshore market is known for suddenly turning into a type of rush and wait. At this moment, it’s time for others to hustle if they want to keep their place in line.

https://en.clickpetroleoegas.com.br/com-a-chegada-de-furacao-dez-plataformas-de-petroleo-foram-evacuadas/