Globalsantafe Corp.

[life_in_the_oaks]

I actually meant to post this article in earlier message. This addresses what your broker has discussed.

The other article was about the high booking %'s that make all of those companies lucrative on an accretive takeover basis.

From Reuters...I place in bold the paragraphs outlining several targets.

US offshore driller consolidation expected in 2007
Thu Dec 7, 2006 1:16 PM ET

By Anna Driver

HOUSTON, Dec 7 (Reuters) - Tight demand, attractive valuations and a Norwegian company that has said it is ready to get bigger have sparked widespread expectation for consolidation in the U.S. offshore drilling sector in 2007.

Possible scenarios include a leveraged buyout by a private equity firm, large-scale recapitalizations or the acquisition of a U.S. driller by an overseas company, U.S. analysts said.

And a lot of industry attention is focused on Norwegian driller SeaDrill Ltd. <SDRL.OL>, which said in no uncertain terms in November that it was looking to grow by "creating a world leading offshore drilling company."

SeaDrill is controlled by Norwegian shipping magnate John Fredriksen, who analysts credit with the know-how and experience to make an acquisition work, citing his leadership in building tanker company Frontline Ltd. <FRO.N><FRO.OL>.

"SeaDrill is backed by an individual who helped consolidate the tanker market," said Poe Fratt, an analyst with A.G. Edwards in St. Louis. "They've already bought some companies and it looks like they may be on the verge of merging or acquiring a U.S. company."

SeaDrill also bought another Norwegian oil driller, Smedvig, earlier this year and has risen to a number six ranking worldwide since it was founded in May 2005, the company said.

LBO?

Offshore drillers are also seen as juicy targets for private equity firms who expect the companies' profit cycle to extend beyond 2009, a scenario that equity investors are not pricing into the stocks, analysts said.

"You've got such significant earnings growth and cash flow yield," said Pierre Conner, an analyst at Capital One Securities. "And the equity markets are pricing these stocks as if they peaked, assuming the cycle ends in 2009."

In addition, demand for rigs is expected to stay firm for the next several years, as many drillers are nearly booked.

"Rig availability is becoming very short and the customer is assigning contracts to use rigs well out into the future at very high day rates," A.G. Edwards' Fratt said.

Drillers' profits have surged and available rigs have become scarce and expensive over the past two years as oil and gas producers have spent heavily to take advantage of sky-high energy prices.

Bear Stearns analyst Robin Shoemaker recently wrote in a note to clients that Houston, home of many drilling companies, is said to be "crawling" with private equity firms looking to make deals.

But because U.S. drilling executives who have lived through boom and bust cycles are wary of merging with each other, a leveraged buyout or acquisition by a foreign company such as SeaDrill is more likely, analysts said.

The most talked about targets for consolidation include GlobalSantaFe Corp.<GSF.N>, Noble Corp. <NE.N>, Diamond Offshore Drilling Inc. <DO.N> and Ensco International Inc. <ESV.N>.

And any merger or takeover activity would likely boost the sector, as investors anticipate who might be next.

In a recent note to clients, Merrill Lynch analyst Alan Laws forecast "a 15 percent or more rise on an announced transaction." He added that consolidation among offshore drillers "is a real possibility in 2007."

So far this year, the Philadelphia Stock Exchange Oil Service index <.OSX>, which includes some drillers, has risen nearly 16 percent.
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LITO