Noble to Acquire Frontier Drilling in a $2.16 Billion Deal

Offshore oil drilling rigNoble (NE) is looking to strike it rich with a $2.16 billion acquisition of FDR Holdings, as the offshore drilling contractor seeks to expand its footprint in the mid- and deepwater drilling zones, the company announced Monday. The deal comes after a federal court overturned a moratorium on deepwater oil drilling in the U.S. and its competitor BP (BP) is saddled with astronomical mounting costs from its horrendous Gulf of Mexico oil spill.

Under its acquisition, which is expected to close by the end of July, Noble will get six floating drilling units from FDR, a privately held company that's also known as Frontier Drilling. FDR's floating drilling fleet is expected to bring in an addition $2 billion above Noble's contract backlog over approximately 23 rig-years.

"This acquisition is a highly complementary extension of our mid- and deepwater presence and positions us for additional growth in new market segments that can provide further opportunities for Noble and our customers," said Noble CEO David Williams in a statement. "Noble's historical hallmark of a strong safety culture and our reputation for operational excellence should benefit Frontier's existing customers and drive value for our shareholders."

A Worldwide Drilling Fleet


Frontier, through a joint-venture with Royal Dutch Shell, owns two so-called Bully-class drillships, designed to handle the depths of the Arctic, that are currently being built.

In addition to the joint venture, Frontier also has a deepwater drillship operating in Southeast Asia under contract with Shell through mid-2015; a drillship in Nigeria under contract with the Nigerian Petroleum Development Co. until the third quarter; an Arctic-class drillship that's currently moored and under contract with Shell but may be dispatched to Southeast Asia until the third quarter 2011; and a deepwater floating production/storage/offloading vessel that's expected to soon begin a 100-day short-term contract.

And of particular note, Noble will snap up a moored deepwater semisubmersible driller that's contracted with Shell in the Gulf of Mexico until the second quarter of 2012. That contract comes with the dayrate of $383,000 that Noble gets to charge Shell. And with the federal court lifting the drilling ban, that could spell big bucks for Noble.


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