In line with recent large-scale mergers transforming the global oil and gas sector, it was reported earlier this week that offshore drilling giants Transocean and Seadrill are in discussions about a potential merger, although a final decision has not been made. If realized, the merger would create one of the world’s largest offshore drilling contractors, significantly impacting the global oil and gas sector and yielding far-reaching implications for Africa’s industry. At the Invest in African Energy (IAE) Forum in Paris next May, discussions will explore the growing trend of positive rig market consolidation and its role in enhancing the investment climate for Africa’s offshore projects, accelerating technological advancements and shifting market dynamics.
Offshore Drilling Market Consolidation
The African and global offshore drilling industry has experienced a wave of consolidation in recent years. In June, offshore rig contractor Noble announced plans to acquire Diamond Offshore Drilling in a $1.59 billion deal. Upon completion, the acquisition will make Noble the largest seventh-generation drillship operator globally, owning and operating a fleet of 41 offshore rigs and holding a 24% market share. This follows a previous merger between Noble and Maersk Drilling in 2022, in which the two companies united capabilities and resources to operate a modern, high-end fleet of floaters and jackup rigs. According to data and analytics firm Wood Mackenzie, following the Noble-Diamond deal, more than 60% of total floater backlog will be handled by four drilling contractors. Transocean leads the industry with over 35 rigs in operation, while following its recent acquisition, Noble now ranks closely behind, with Valaris and Seadrill completing the top four.
These deals are part of a broader trend in the offshore rig market, where companies are focusing on mergers and acquisitions to access high-demand rigs without the long lead times and high costs of new builds. The current economic environment has spurred companies to consolidate rather than invest in new rigs, especially as shipyards remain reluctant to offer favorable financing terms for new rig construction. Following the Noble-Maersk merger, Shelf Drilling acquired five jackup rigs from Noble, expanding its presence in the Middle East and capitalizing on higher demand in the region. In May this year, Seadrill agreed to sell three jackup rigs offshore Qatar to its joint venture partner Gulf Drilling. The $338 million transaction aligns with Seadrill’s strategy to concentrate operations in core regions, including the Gulf of Mexico, Brazil and West Africa.
Mergers Reshape Competitive Landscape
This series of mergers has significant implications for Africa’s upstream industry. First, these newly consolidated entities have strengthened their market influence, enabling them to negotiate better rates, secure larger contracts and offer more competitive pricing through economies of scale. In Africa, where offshore projects are vital – particularly in regions like West Africa and the Gulf of Guinea – this consolidation could improve project capabilities, but also intensify competition for smaller operators. Second, mergers often lead to advancements in technology and innovation. By combining robust technological capabilities in deepwater and ultra-deepwater drilling, these larger companies can offer more efficient and cost-effective drilling solutions. This has the potential to attract additional investment to African offshore projects by reducing operational costs and increasing the viability of complex fields.
Merged entities are also more resilient amid market fluctuations. Africa’s oil and gas sector is highly sensitive to global oil price volatility – a stronger, diversified drilling contractor is better equipped to withstand market swings, ensuring continuity in African projects even during price fluctuations. This stability could provide essential support for African economies reliant on offshore drilling revenues. With rig activity expected to increase starting in 2025, the recent wave of mergers signals a renewed commitment to Africa’s offshore sector by major global players. This consolidation is poised to enhance project and technological capabilities. while strengthening market resilience across the region, with a view to harnessing Africa’s offshore and deepwater potential.
IAE 2025 is an exclusive forum designed to facilitate investment between African energy markets and global investors. Taking place May 13-14, 2025 in Paris, the event offers delegates two days of intensive engagement with industry experts, project developers, investors and policymakers. For more information, please visit www.invest-africa-energy.com. To sponsor or participate as a delegate, please contact [email protected].
