New analysis examines next steps in Noble-Maersk merger

April 13, 2022
Merged entity may need to divest five jackups to secure UK clearance.

Offshore staff

NEW YORK CITY – In a “flash note,” Evercore ISI reports that Noble Corp. and Maersk Drilling have provided an update on their merger process, with the primary item of note being that the UK Competition and Markets Authority (CMA) will likely require the divestiture of five jackups located in the North Sea.

In addition to three Noble jackups located off the UK (Hans Deul, Houston Colbert, Sam Hartley), the company will likely need to divest the Sam Turner (midway through a two-year contract off Denmark with TotalEnergies) and possibly the Lloyd Noble, which is contracted off Norway to Equinor through February 2023.

Noble and Maersk have reportedly proposed to substitute the Lloyd Noble with the Maersk Innovator, which is working off the UK for Harbour Energy through February 2023. Potential divestiture of the proposed “Remedy Rigs” has commenced and while the outcome remains uncertain, is not expected to impact the mid-2022 closing date.

In addition to obtaining UK and Angolan approvals, the next steps for closing the deal include Noble’s May 10 shareholder vote and Maersk’s Danish tender offer which is expected to commence in late May or early June. The companies believe the financial and strategic rationale remains sound, including the $125 million run-rate cost synergies, and have no plans to change the all-stock 50/50 deal structure.

On a side note, the Evercore report comments that the North Sea could soon be short of jackups. Per Petrodata RigBase, 29 of 38 jackups in the North Sea are under contract. However, excluding a cold-stacked jackup that is not marketed, only three of eight warm-stacked jackups are available (Maersk Highlander, Noble Sam Hartley, Well-Safe Protector), since the remaining five units have contracts starting over the next 6 months.

This includes two units heading to the Middle East, with the Noble Houston Colbert heading there for a 3.5-year contract with Qatargas and Aurora JSC’s Perro Negro 8 for a five-year contract with Saudi Aramco. Borr Drilling’s contracted Ran will also depart the UK for a new 5.5-month contract with Wintershall DEA off Mexico. With the imminent departure of three jackups, the North Sea’s jackup supply will fall to 35 unit, the lowest since 2009. The jackup supply in the UK will also fall to 14 units, with Valaris retaining a leading market share.