Offshore oil driller Noble will get 'ever pickier' on M&A after Diamond deal, CEO says

Summary

Noble Corporation's CEO, Robert Eier, discusses the company's recent acquisition of Diamond Offshore for $1.6 billion, aiming to expand offshore rig operations and leverage economies of scale. Eier highlights the importance of scale in the energy sector and the company's journey of consolidation through major mergers and acquisitions. He expresses confidence in the deal's regulatory approval and addresses the wide range of predictions for global oil demand, emphasizing Noble's preparedness for various market outcomes. The conversation also touches on the potential for increased demand in offshore drilling, especially in the deep water segment, as Noble's backlog of tenders indicates a resurgence in the industry.

Takeaways

• 📈 Noble Corporation is actively pursuing acquisitions to increase its scale in the offshore drilling industry.
• 💰 The acquisition of Diamond Offshore is valued at $1.6 billion, aiming to enhance Noble's offshore rig count and global reach.
• 🔍 Scale is emphasized as crucial for meeting the needs of sophisticated customers and spreading investments in technology and innovation.
• 🛠️ Noble has undergone three major mergers and acquisitions in recent years, with Diamond being the latest and significant addition.
• 🚀 The company is confident about the regulatory process and expects the deal to close in the first quarter of the following year.
• 🔎 Despite previous acquisitions, Noble remains selective and strategic in its approach to further deals for shareholder value.
• 🌐 The energy sector, including offshore drilling, is expected to see market expansion for at least the next five years.
• 📉 Predictions beyond 2030 for oil demand vary widely, with some suggesting a peak by 2029 followed by a decline.
• 🛳️ Noble is observing an increase in demand, particularly in the deepwater segment, with leading indicators and customer budgets on the rise.
• 📊 The offshore rig count has rebounded but remains lower than pre-pandemic levels, indicating potential for further industry expansion.
• 💼 Noble's CEO, Robert Eier, highlights the company's strong position with a large fleet and a robust backlog of tenders, signaling a positive outlook for offshore drilling.

Q & A

What recent acquisition has Noble Corporation announced?

Noble Corporation has announced an acquisition of Diamond Offshore Drilling, with a cash and stock deal valued at $2.6 billion.

What is the expected outcome of the acquisition for Noble Corporation's offshore rigs?

The acquisition is expected to increase the number of offshore rigs that Noble Corporation has, enhancing their economies of scale in the business.

Why is scale important in the offshore drilling industry according to Robert Eier?

Scale is important because it allows Noble Corporation to meet the global needs of their large and sophisticated customers by spreading investments in technology and innovation across a larger base.

How many major mergers and acquisitions has Noble Corporation made in recent years?

Noble Corporation has made three major mergers and acquisitions in recent years, including the acquisition of Diamond Offshore Drilling.

What was the significance of the Maersk Drilling acquisition for Noble Corporation?

The Maersk Drilling acquisition in 2022 was described as a transformative merger for Noble Corporation, significantly increasing their scale and capabilities.

What is Noble Corporation's approach to future acquisitions?

Noble Corporation will continue to look at deals that are accretive for shareholders but will be increasingly selective, ensuring that any future deals are the right fit.

What is the expected regulatory risk for the Diamond Offshore acquisition?

Noble Corporation is confident about the regulatory approval process, expecting to close the deal in the first quarter of the next year, with compliance with a handful of regulators around the world.

How does Robert Eier view the predictions about global oil demand peaking by 2029?

Robert Eier acknowledges the difficulty in predicting energy demand past 2030, noting a wide range of forecasts and emphasizing that Noble Corporation is positioned for a variety of outcomes.

What is Noble Corporation's strategy for dealing with the potential decline in oil demand?

Noble Corporation is prepared for a range of outcomes, focusing on maintaining a scale that can last through the cycle and having some of the best assets in their fleet.

What trends does Noble Corporation see in the offshore drilling industry?

Noble Corporation sees an increasing demand, especially in the deepwater segment, with leading indicators such as customer budgets, FIDs, and subsea orders showing positive signs.

How does the current offshore rig count compare to pre-pandemic levels according to Baker Hughes?

The offshore rig count has rebounded but is still lower than pre-pandemic levels, suggesting potential for further expansion in the industry.