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Transocean and Seadrill Discuss Merger Amid Offshore Oil and Gas Rebound

Oil and Gas

Evaluating, Discoveries, Exploration, Investment

Business Honor
24 October, 2024

Transocean and Seadrill discuss all-stock merger to enhance investment opportunities into offshore oil and gas

Transocean and Seadrill are in discussions over an all-share merger potentially set up to improve investments in offshore oil and gas. The companies are reportedly keenly considering what form the deal should take, said the unnamed sources familiar with the matter, according to Bloomberg.

Offshore oil and gas exploration has been trending upwards, with most major new discoveries made offshore. Guyana's crude oil is exclusively sourced from one block, and Suriname saw TotalEnergies recently sanction $10.5 billion in offshore spending. Exxon also appears to be eyeing a $10 billion offshore project in Nigeria. Prospects for new finds in the Gulf of Mexico and Namibia are improving prospects for offshore exploration and investment.

According to Rystad Energy, investment in deepwater exploration has even surpassed that in shale oil mainly because recovery rates in shale have slid by 15% between 2020 and 2023. Offshore recovery rates remain stable, while deepwater fields have everything about them which shale once offered: better costs of development, and more asset life cycles.

It hasn't really been a good year at all for either Transocean or Seadrill; as both stocks decline, the former reduced its stock by 35%, while the latter cut by 26%. However, the current uptrend in offshore exploration creates strategic opportunities for both of them. A merger could help to improve their competitive positioning worldwide and increase the capture of emerging opportunities in Guyana, Suriname, and Nigeria, among others.