Although management's first priority was to pay down debt, there was every reason to believe that the company would continue to snap up desirable firms in an effort to grow even larger. The Southeastern Drilling Company, Sedco, was an American firm, founded in by future Texas governor Bill Clements to drill in shallow marsh water.
Share this company profile. Click on one of the icons to share the company. Presentation Oil - Exploration. Executive information Download the executives list. Activities Producer Distributor Service provider Earth-moving, excavation, foundation and tunnelling contractors Drilling, injecting and test boring contractors Oil and gas drilling and exploration contractors Onshore drilling contractors Offshore drilling contractors Mine prospecting and extraction contractors Boring, drilling and mine shaft sinking contractors.
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During this decade-long lean period, offshore drilling rigs in operation declined precipitously, from more than 1, in the early s to around In this way the parent company hoped to transform itself from a diversified pipeline company into an exploration and production company. The newly independent Sonat Offshore, as a result of the offering, had a clean balance sheet and money in the bank, and was well positioned to weather an ensuing decline in gas prices. Moreover, the company's emphasis on deepwater oil drilling also would prove to be a wise strategy.
It was recognized that the most desirable energy plays that remained in the world resided under great depths of ocean. Although the technology existed to tap these deposits, only until oil prices reached a certain level would it become economical for a company like Sonat Offshore to invest in a new generation of drill ships. The cost of such rigs was so high that only large companies were able to afford them. There were other reasons why consolidation among offshore drilling contractors became desirable in the mids.
It would likely bring pricing discipline to a highly fragmented industry, in which the top three companies served just 27 percent of the market. A small drop in the price of gas or oil could result in a major decrease in day rates.
Clearly, companies could not expect to achieve long-term health by simply building more rigs to expand their business. Growth had to come by acquiring existing rigs, to gain some leverage with producers. With fewer but larger contractors in the industry, the addition of new rigs would hopefully become more of a rational and systematic process.
In addition, larger players could operate more efficiently around the world, with rigs strategically positioned to save on moving charges while building a more diversified customer base.
Transocean ASA had been created in the mids when a Norwegian whaling company entered the semisubmersible business, then later consolidated with a number of other companies. Because of its large North Sea operations, Transocean ASA was considered a prize catch, one that would automatically make the buyer into the unquestioned leader in deepwater drilling.
The deal became effective in September , and Sonat Offshore changed its name to Transocean Offshore. Rising oil prices, in the meantime, benefited offshore drilling contractors. The chairman of Transocean Offshore, J. Michael Talbot, concluded that the trend could continue for as long as 20 years and made a commitment to expand on the company's fleet. With long-term contracts with oil companies in hand, Transocean Offshore began the development of a new generation of massive drill ships, featuring the latest in technological advances, and designed to drill to 10, feet, as opposed to the 3,foot capacity of the drill ships built in the mids.
The first ship, the Discoverer Enterprise, would be feet in length with a derrick that stood feet high. It could sleep and carry , barrels of oil and gas. Because it featured two drilling systems in one derrick, the ship could reduce the time to drill a development well by up to 40 percent and could drill and lay pipeline without the need of a pipelay barge. Moreover, the Enterprise would essentially serve as a floating research and development project for two additional high-tech ships.
Paris-based Schlumberger had been involved in offshore drilling for many years. Forex teamed with Languedocienne to create a company called Neptune to engage in offshore drilling.
Forex had gained complete control of Neptune by , when Schlumberger bought the remaining interest in Forex. The Southeastern Drilling Company, Sedco, was an American firm, founded in by future Texas governor Bill Clements to drill in shallow marsh water.
In the s it began to provide drilling services in deeper water. Schlumberger acquired the company in and a year later combined it with Forex to create Sedco Forex Drilling. Schlumberger shareholders would receive roughly one share in the new company, Transocean Sedco Forex, for every five Schlumberger shares held. In the end, Schlumberger shareholders would control approximately 52 percent of the new company.
Both Schlumberger and Transocean would receive five seats on the board, while Schlumberger's vice-chairman would serve as the chairman of the company and Transocean's Talbert would become president and CEO. Its fleet included 46 semisubmersibles and seven deepwater drill ships, with others under construction.
It was widely expected that the deal would create added pressure on other contractors to merge, as much needed consolidation in the industry continued to gain momentum. The company's fortunes suffered a downturn in and although it had made strides in redressing its situation, its debt load remained high and management decided that the time was ripe to merge with Transocean Sedco Forex. With offshore rigs, inland barges, and supporting assets, the combined company easily outpaced its closest rival, Pride International, with just 59 offshore rigs, of which 45 were shallow-water jackups.
Moreover, Transocean provided almost half of the world's ultra-deep drilling ships. In effect, Transocean Sedco Forex was able to expand its global fleet with the most extensive range of offshore rigs and markets, while gaining a presence in the shallow and inland waters of the Gulf of Mexico, where it previously had no fleet.
Overall, there was very little overlap in rigs.