Schlumberger Limited and Transocean Offshore Inc.
have signed a definitive merger agreement under which the offshore contract drilling business of Schlumberger (Sedco Forex Offshore) will be spun off and promptly combined with Transocean Offshore in a merger of equals.
The resulting company, Transocean Sedco Forex, will be the world's largest offshore drilling company and is projected to become the fourth largest oilfield service company in terms of market capitalization. The transaction, which should close by December 31, 1999, is anticipated to be modestly dilutive to Transocean Offshore's current earnings expectations for 2000 and accretive thereafter.
Under the proposed agreement, Schlumberger stockholders will own 52 percent of the fully diluted stock in the resulting company, Transocean Sedco Forex.
The agreement has been approved by the Boards of Directors of Transocean Offshore and Schlumberger, and is subject to the approval of the stockholders of both companies as well as regulatory approvals and other customary closing conditions. Following the closing of the transaction, the shares of Transocean Sedco Forex will
be traded on the New York Stock Exchange under the symbol RIG.
The merger of Transocean Offshore and Sedco Forex Offshore will bring together two of the most modern and versatile fleets in the offshore drilling industry and create a truly global offshore drilling company. The company will have operations in all of the world's major offshore drilling regions including the North Sea, the Gulf of Mexico, Southeast Asia, West Africa and Brazil. Transocean Sedco Forex will have the world's largest offshore rig fleet with 75 units. Sedco Forex Offshore will bring a fleet of 44 mobile offshore drilling rigs, including 27 semisubmersibles, two deepwater drillships, 11 jackups and four tender rigs. The rig numbers include three semisubmersibles under bareboat charter, and two semisubmersibles and one drillship under management contract.
Transocean Offshore's fleet of 31 rigs consists of 20 semisubmersibles, five deepwater drillships and six jackups. The combined fleet totals include seven rigs under construction, including, for Sedco Forex Offshore, three Sedco Express-design semisubmersibles and one jackup and, for Transocean Offshore, thre Discoverer Enterprise-class drillships. The combined worldwide work force will consist of approximately 7,500 people.
Schlumberger indicated, in 1998, Sedco Forex Offshore revenue and net income included in the consolidated Schlumberger results were $1.1 billion and $390 million, respectively. In 1999, net income from Sedco Forex Offshore is expected to represent around 15 percent of the annual net income of Schlumberger. Victor E. Grijalva, vice-chairman of Schlumberger, will become chairman of Transocean Sedco Forex, while J. Michael Talbert will be president and CEO. The Board of Directors of Transocean Sedco Forex will be composed of 10 persons, five designated by Schlumberger and five by Transocean Offshore.