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Thursday, 10/24/2024 4:24:41 PM

Thursday, October 24, 2024 4:24:41 PM

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Transocean and Seadrill in Merger Talks as Offshore Oil and Gas Rebounds
By Irina Slav - Oct 24, 2024, 2:40 AM CDT

https://oilprice.com/Latest-Energy-News/World-News/Transocean-and-Seadrill-in-Merger-Talks-as-Offshore-Oil-and-Gas-Rebounds.html

Transocean and Seadrill are discussing a merger to capitalize on a rebound in offshore oil and gas investment, Bloomberg has reported, citing unnamed sources in the know.

A deal is far from certain, the report noted, as the companies currently discuss the structure of a potential tie-up.

Offshore oil and gas exploration has been growing at a steady pace in recent years, with virtually all major new discoveries made offshore. All of Guyana’s crude oil, for instance, comes from one offshore block; TotalEnergies recently signed off on a $10.5-billion offshore project in Suriname; and Exxon is mulling over a $10-billion offshore project in Nigeria.

New discoveries have also been made in the Gulf of Mexico and Namibia, brightening the outlook for offshore exploration and production, and driving a jump in investment in the industry segment.

Rystad Energy reported earlier this month that deepwater exploration investment was exceeding investment in shale oil, and with good reason. The Norwegian research firm noted that the amount of oil recovered per foot drilled in the shale patch was on the decline, shedding 15% between 2020 and 2023. Offshore recovery rates, however, are more stable, and deepwater fields offer bonus advantages, such as lower costs, greater resource potential, and longer productive lives of the assets.

Transocean and Seadrill, meanwhile, have seen their shares decline quite substantially this year. Transocean’s stock has shed 35% since January, while Seadrill’s shares have declined by 26% amid the downturn that preceded the current rebound in the offshore exploration industry.

The stock trend is probably about to change, especially if the two position themselves in such as way as to take maximum advantage of industry trends. It shouldn’t be too hard to do given that these are two of the biggest offshore drilling companies globally. A tie-up could secure that advantageous position for both.

By Irina Slav for Oilprice.com

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