HOUSTON (Dow Jones)- Transocean Ltd. (RIG) Chief Executive Steven Newman said that the company’s primary motivation to bid for Norwegian rig owner Aker Drilling ASA (AKD.OS) is to boost its presence in Norway’s offshore market.
“We have a long history there, we have some really strong customer relationships there, and we’ve got some great people there,” Newman told investors on a conference call to discuss the proposed takeover. “And so we wanted to take advantage of an opportunity to grow that first and foremost.”
Transocean said it has offered to buy Aker Drilling for $1.43 billion in a cash deal that would add a pair of harsh-weather drilling rigs–both working under contracts off Norway–to the world’s largest offshore fleet.
Terry Bonno, who heads Transocean’s marketing unit, said those rigs position the company to “take advantage of the new emerging area of the Barents [Sea].”
In the deal, Transocean will also get a pair of ultra-deep-water drillships that are under construction in a Korean shipyard.
In addition to the cash payment–which is equal to 26.50 kroner, or $4.83 per-share–Transocean will assume about $800 million in debt and commit $900 million to complete the under-construction rigs.
Transocean will also gain options to build another two ultra-deep-water drillships for $600 million apiece. The company has until October to decide if it will place those orders, Newman said, adding that the company’s long-standing aversion to building new rigs speculatively remains.
Offshore drillers have spent the last year on a buying spree, ordering dozens of new rigs from Asian shipyards as they race to fill their fleets with rigs that are able to drill in increasingly deeper waters. Transocean, however, has sat out the frenzy.
“As we have consistently said, our greatest objection to building on spec is the fact that excess supply could have a negative impact on day rates and asset utilization,” Newman said.
Newman would not rule out ordering those additional drillships, however. He called the terms, which call for a 25% up-front payment with the remainder due upon delivery, “very attractive.”
Transocean shares recently traded 2.79% higher at $57.16.
-By Ryan Dezember, Dow Jones Newswires