Oilfield services firm Transocean (NYSE:RIG) will acquire offshore rig contractor Valaris (NYSE:VAL) in an all-stock deal valued at ~$5.8B, where Valaris shareholders will receive 15.235 shares of Transocean stock for each VAL share owned, representing a 31.6% premium based on the previous closing price. Transocean will own a 53% stake in the combined firm and Valaris will hold the remaining 47%.
The transaction implies a combined enterprise value of ~$17B based on the stock’s most recent closing prices.
The new entity is set to become an offshore drilling industry leader with a fleet of 73 rigs, including nine semisubmersibles, 33 ultra-deepwater drillships and 31 modern jackups. The combined company will also hold an industry-leading backlog of roughly $10 billion, improving cash flow stability. The merger is expected to close in late 2026.
The deal will strengthen Transocean’s position in the booming, high-demand offshore drilling market, delivering over $200 million in cost synergies and expanding geographic reach and deepwater and shallow capabilities.
The global offshore drilling market is experiencing a significant boom, driven by a strong resurgence in demand for both oil and natural gas, with the market expected to grow from approximately $86 billion in 2023 to over $122 billion by 2032. This upcycle is characterized by rising day rates, high utilization of rigs, and a substantial backlog for major drilling contractors, with the market projected to reach all-time highs.
Deepwater production is expected to increase by 60% by 2030, contributing to a massive demand for advanced drillships and semi-submersibles. Modern rigs, particularly those with high-spec capabilities and 7th-generation drillships, are in extremely high demand, leading to tight supply and rising day rates.
Asia-Pacific is the largest offshore oil market, accounting for ~45% of the global market driven by high investment from China and India for deepwater projects. However, Latin America is the fastest-growing region, with significant activity in Brazil’s pre-salt fields and Exxon Mobil’s (NYSE:XOM) Guyana.
By Alex Kimani for Oilprice.com
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