Seeking Alpha
Bonds, dividend investing, ETF investing
Profile| Send Message|
( followers)  

This week oil driller Ensco plc (NYSE:ESV) announced the acquisition of competitor Pride International (NYSE:PDE) in a cash and stock deal valued at $7.3 billion. According to the deal, shareholders of Pride will receive a 0.4778 Ensco share and $15.60 in cash for each Pride share they own. This offer represents a 21% premium to Pride’s stock price as of Feb 4th.

From a Bloomberg article suggesting that this deal may spur more mergers in the industry:

Rowan Cos. (NYSE:RDC), a Houston-based operator of shallow-water rigs, and DryShips Inc.’s (NASDAQ:DRYS) Ocean Rig UDW (OTC:OCNRF) unit may be the next targets for drillers eager to expand fleets as the search for offshore oil and natural-gas fields intensifies, said Brian Uhlmer, an analyst at Global Hunter Securities LLC in Houston.

Buying competitors is an alternative path to growth amid a building boom for deep-water rigs that Barclays Plc analyst James West said is reducing shipyard space from South Korea to Finland.

“This industry is fairly scattered and consolidating this and moving forward on a basis of strength rather than speculation is always a good thing,” said Esa Ikäheimonen, chief financial officer of Seadrill Ltd. today in a telephone interview. Seadrill, based in Bermuda, hasn’t decided yet whether to shed its 9.4 percent stake in Pride and use the cash to pursue other targets, said Ikäheimonen.

Companies in this industry offer their highly-specialized technical expertise to the major oil firms. The success of the oil giants depends on smaller companies like the oil-drillers and other service providers. So investors looking to research into companies in the oil drilling industry may want to start with the world’s top companies noted below:

2010 Rank Company Name Ticker Market Cap ( in US $ billions) as of 12/31/2010 Country
1 Schlumberger SLB 113.9 USA
2 Halliburton HAL 37.1 USA
3 Baker Hughes BHI 24.7 USA
4 Transocean RIG 22.2 Switzerland
5 Weatherford WFT 16.9 Switzerland
6 Seadrill SDRL 14.8 Norway
7 China Oilf ield Services OTCPK:CHOLY 14.8 China
8 Diamond Offshore DO 9.3 USA
9 Noble Corp NE 9 Switzerland
11 Nabors Industries NBR 6.7 Bermuda
12 Fugro N/A 6.6 The Netherlands
13 Pride International PDE 5.8 USA
14 Helmerich & Payne HP 5.1 USA
15 CGG CGV 4.6 France

Source: PFC Energy

Disclosure: No positions

Source: 15 Global Oilfield Service Companies That Could Benefit From Merger Wave