Offshore drilling company Seadrill has its eye on assets

Offshore drilling company Seadrill is looking to acquire more assets or create a bigger player by merging with rivals, the company’s chief executive said on Wednesday.

Norwegian-born billionaire John Fredriksen has lost control of the company, once the world’s largest drilling company by market capitalization, to creditors in two debt restructurings since 2014.

New York-listed Seadrill, now much smaller and leaner, is itself looking to buy distressed assets or those with “challenged balance sheets,” Chief Executive Simon Johnson told an investor conference in Norway.

“We’re not going to do anything crazy, we’ve proven our discipline,” he said. But the amount of cash the company has on its balance sheet, “which some people consider inefficient, gives us both a defensive buffer and a basis for attack,” he said.

“We don’t see an end to consolidation (in the offshore drilling market),” Johnson added.

Debt restructuring following the oil market crashes of 2014 and 2020 led to a wave of consolidation in the sector, with the number of players and rigs shrinking while the pace of drilling more than doubled as of 2021.

“We think there’s room for one big consolidation, especially given that our customers are consolidating as well,” Keelan Adamson, president and chief operating officer of Seadrill rival Transocean, said at the conference.

Johnson told the conference that Seadrill remains uncertain whether the company will succeed through a potential merger or be acquired by others, provided the price is right.

“We want to add a few more (rigs) to bring the total to 20-25… But we will also be open to being a junior partner in the integration, provided we receive a premium reflecting the quality of our assets,” he added.

Johnson declined to tell Reuters whether the company was involved in any negotiations about a possible merger.

According to LSEG data, its three largest shareholders are investment funds Bybrook Capital LLP, Canyon Capital Advisors LLC and Elliott Management Corporation.

(Reuters – reporting by Nerijus Adomaitis; editing by Jan Harvey)