Noble acquisition of Diamond Offshore to create the fourth-largest drilling contractor by fleet size

Deal will make Noble the largest seventh-generation drillship operator, with 24% market share, says Evercore ISI.

NEW YORK CITY – The recently announced acquisition of Diamond Offshore will make Noble Corp. the fourth-largest drilling contractor in terms of fleet size, according to analysis from Evercore ISI’s latest Offshore Rig Market Snapshot. 

In terms of fleet size, the merged entity will trail only COSL, ADES, and Valaris.

On June 10, Noble and Diamond Offshore entered into a definitive merger agreement in a stock plus cash transaction (0.2316 Noble shares and $5.65 per share in cash for each diamond share), representing $600 million total cash paid to Diamond Offshore shareholders on a fully diluted basis (11.4% premium to closing stock prices on June 7, 2024).

Diamond Offshore has 12 offshore floaters globally, including four seventh-generation drillships (average dayrates of $460,000/day) and the Vela, which is managed on behalf of Seadrill and has a backlog of $2.1 billion.

Combined, Noble is expected to own and operate a fleet of 41 offshore rigs following the acquisition, including 28 floaters and 13 jackups. Noble’s backlog now stands at $6.5 billion.

“We view Noble’s acquisition of Diamond Offshore as strategic, immediately accretive to free cash flow per share,” Evercore writes, “and [the deal is] expected to realize annual pre-tax cost synergies of $100 million, with 75% to be realized within one year of closing.”

The report added: “The acquisition is anticipated to significantly strengthen Noble’s position in the golden triangle and the high-spec markets in the North Sea and Australia.”

The company’s floater market share will increase from 9% to 14%, which will make Noble the largest seventh-generation drillship operator, with 24% market share, surpassing Transocean’s 20% market share of floaters, according to Evercore. 

The transaction is expected to close by 1Q 2025.