Noble and Maersk’s Offshore Drilling Merger Raises Competition Concerns in UK

The UK Competition and Markets Authority has found that the proposed merger between offshore drilling contractors Noble Corporation and Maersk Drilling could increase operating costs for oil and gas producers in the North Sea.

The CMA opened an investigation into the proposed £2.6 billion merger in February.

CMA’s investigation has so far found the deal raises competition concerns in the supply of jack-up rigs for offshore drilling in North West Europe, including the UK, Denmark and the Netherlands. The agency said Noble and Maersk Drilling are two of the four main suppliers in the offshore drilling market and have frequently competed against each other for contracts in the past.

The CMA is concerned that together the two companies would not face sufficient competition which could lead to higher prices and lower quality services for oil and gas producers in the North Sea.

“Offshore drilling services are critical for oil and gas producers. Our investigation showed that Noble and Maersk have competed closely in the past and face only limited competition,” said Colin Raftery, Senior Director of Mergers at the CMA. “We’re therefore concerned that the loss of competition that this deal would bring about could result in higher prices or lower quality services, increasing operating costs for oil and gas producers in the UK North Sea.”

The primarily all-stock merger between Noble and Maersk Drilling was announced in November. The combined company, named Noble Corporation, will operate a modern fleet of 20 floaters and 19 jackup rigs, creating one of the leading offshore drilling companies. Closing of the transaction has been anticipated for mid-2022. Shareholders of each company will hold approximately 50% of the new Noble Corporation.

Noble and Maersk Drilling have been given 5 working days to offer proposals to address the CMA’s concerns. If the CMA rejects the proposals, the deal will be referred for an in-depth Phase 2 investigation, to be carried out by a group of independent CMA panel members.

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