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 rig 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 industry. If Ensco had set its sights on becoming the world's most powerful offshore rig owner, they nearly achieved it today with their merger agreement with Rowan in an all-stock transaction. The company will operate 28 floating platforms and 54 jackups.

After taking the first step towards market consolidation last year with its acquisition of Atwood, Ensco decided they were ready to run a super-sized business. Rowan offered them just that.

Ensco did not become the largest drilling owner by assets. They are acquiring one of the most exciting and globally-reaching fleets of offshore equipment on the market with Rowan. They are getting the coveted ARO Drilling joint venture with Saudi Aramco (which has another seven jackups and will build 20 more). They are achieving synergies, economies of scale and more control over an industry that has suffered from an overly fragmented landscape and the oil companies' desire to cut costs.

What's next for the new Ensco?

The one thing Ensco didn't get out of this deal is access to harsh environment semisubs. If there's one place you want to be right now (and in the future), it's in the North Sea floating rig market, with the looming shortage of rigs and the prospect of much higher entry fees.

Once Ensco rationalizes their new fleet, we won'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 Rowan referred to and will likely be sold soon). Ensco has at least four older jackups that could be retired soon as well.

What does this mean for the rest of the industry?

This means that if you want to keep competing, you have to do something. As certain rig owners become larger or more specialized (such as Ensco and Transocean), others will find it difficult to remain competitive due to their smaller size.

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

As the biggest players gain the size to justify scrapping, they're setting a higher bar for specs, equipment, and efficiency that will allow them to continue building an advantage over others.

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

The offshore market is known to suddenly turn into something of a rush and wait. At this point, it's time for the others to hurry up if they want to keep their place in line.

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