Transocean Offshore and Schlumberger Combine Forces to CreateThe Leading Offshore Drilling Company
HOUSTON, July 12 /PRNewswire/ -- Transocean Offshore Inc. (NYSE: RIG) and
Schlumberger Limited (NYSE: SLB) today announced the signing of 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. Based on the outstanding fully diluted share count of Transocean
Offshore on June 30, 1999 (approximately 101 million shares), Schlumberger
stockholders would receive approximately 109 million shares in the resulting
company. Using the Schlumberger shares outstanding on June 30, 1999,
Schlumberger stockholders would receive approximately 1 newly issued
Transocean Sedco Forex share for every 5 Schlumberger shares held. The
109 million shares to be issued for the transaction would be valued at
$3.2 billion using the closing price of Transocean Offshore stock on
July 9, 1999. The fully diluted ratio of ownership in the stock of the
resulting company is fixed and not subject to adjustment. The spin-off and
the merger transactions are expected to be free of US federal income taxes and
will be accounted for as a purchase with Sedco Forex Offshore as the
accounting acquirer.
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, 2 deepwater drillships,
11 jackups and 4 tender rigs. The rig numbers include 3 semisubmersibles
under bareboat charter, and 2 semisubmersibles and 1 drillship under
management contract. Transocean Offshore's fleet of 31 rigs consists of
20 semisubmersibles, 5 deepwater drillships and 6 jackups. The combined fleet
totals include 7 rigs under construction including, for Sedco Forex Offshore,
3 Sedco Express-design semisubmersibles and 1 jackup and, for Transocean
Offshore, 3 Discoverer Enterprise-class drillships. The combined worldwide
work force will consist of approximately 7500 people.
Schlumberger indicated that 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% 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 Chief
Executive Officer. The Board of Directors of Transocean Sedco Forex will be
composed of 10 persons, 5 designated by Schlumberger and 5 by Transocean
Offshore.
Euan Baird, Chairman and CEO of Schlumberger commented: "The transaction
between Sedco Forex Offshore and Transocean Offshore will create the largest
and most technically advanced offshore drilling company in the world. This is
also a strategic move for Schlumberger that will permit our Oilfield Services
Geomarkets to focus our resources on further extending our leadership in
value-added reservoir optimization services. Furthermore, the transaction
includes a provision for a global alliance between Schlumberger and Transocean
Sedco Forex to address, proactively, integrated services opportunities."
J. Michael Talbert, Chairman and Chief Executive Officer of Transocean
Offshore added, "The merger of Transocean Offshore with Sedco Forex Offshore
is advantageous due to the rising capital costs for new rig construction, the
increasing size and needs of our customers, the expanding geographic diversity
of offshore drilling and the technical challenges posed by new deepwater
drilling activities. Transocean Sedco Forex will be uniquely positioned to
address these challenges due to its technical leadership, financial strength
and global presence. Both Transocean Offshore and Sedco Forex Offshore have
been leaders in offshore drilling for several decades. This position of
leadership is the result of technical innovation and operational expertise,
particularly in deepwater locations. Two strong operations will now become
one, forming what I believe will be the offshore drilling company of choice
for customers, employees and investors."
The senior management of Transocean Offshore and Schlumberger will host a
conference call on Monday, July 12, 1999 at 10:00 a.m. Eastern Time to give
investors and the press further insight into today's announcement and respond
to questions. All individuals interested in participating in the conference
call should contact 800-819-9193 toll free in the US and Canada, or
913-981-4911 direct worldwide. A replay will be available for one week
beginning at 4 p.m. Eastern Time today at 888-203-1112 toll free in the US and
Canada, or 719-457-0820 direct worldwide. Passcode 728124 should be used to
access the recording for both replay numbers.
This press release and any oral statements made in connection herewith
contain forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements include,
among other things, statements regarding the prospects for and development of
the combined operations of Sedco Forex Offshore and Transocean Offshore, the
integration of their business and operations, accretion and dilution to
earnings from the transaction and resulting market capitalization, all of
which are subject to certain risks, uncertainties and assumptions. These
risks and uncertainties, which are more fully described in the Annual,
Quarterly and Current Reports of Schlumberger and Transocean Offshore and
other filings with the Securities and Exchange Commission, include changes in
industry and market conditions and the price of oil and gas, and the impact of
such changes on Schlumberger and Transocean Offshore. Should one or more of
these risks or uncertainties materialize, or should the assumptions prove
incorrect, actual results from the business of the combined company may vary
in material aspects from those currently anticipated.
Schlumberger is a worldwide leader in technical services with 60,000
employees and operations in over 100 countries. In 1998, revenue was
$11.82 billion.
Transocean Offshore is an international offshore drilling company engaged
in contract drilling of oil and gas wells. The Company specializes in
technically demanding segments of the offshore drilling business, including
industry-leading positions in deepwater and harsh environment drilling
services. The Company also provides international turnkey, coiled tubing and
integrated drilling services to customers worldwide.
Note: Offshore Rig details for Sedco Forex Offshore and Transocean
Offshore are attached below.
Transocean Offshore Inc. Fleet
Type and Name Year Entered Service/Upgraded (A) Location
Semisubmersibles
Polar Pioneer 1985 Norwegian North Sea
Transocean Arctic (B) 1986 Norwegian North Sea
Henry Goodrich (C) 1985 U.K. North Sea
Paul B. Loyd, Jr. (C) 1991/1993 U.K. North Sea
Transocean Leader 1987/1997 Norwegian North Sea
Transocean Rather 1988 U.S. Gulf of Mexico
Transocean Richardson 1988 U.S. Gulf of Mexico
Transocean Explorer 1976 U.K. North Sea
Transocean Discoverer 1977/1985 U.K. North Sea
Transocean Wildcat (B) 1977/1985 Norwegian North Sea
Transocean Winner (B) 1983 Norwegian North Sea
Transocean Searcher (B) 1983/1988 Norwegian North Sea
Transocean Prospect (B) 1983/1992 Norwegian North Sea
Transocean John Shaw 1982 U.K. North Sea
Transocean 96 1975/1997 U.S. Gulf of Mexico
Transocean 97 1977/1997 U.S. Gulf of Mexico
Transocean Driller 1991 Brazil
Transocean Legend 1983 Brazil
Transocean Amirante 1978/1997 U.S. Gulf of Mexico
Transocean Marianas 1979/1998 U.S. Gulf of Mexico
Drillships
Discoverer Seven Seas 1976/1997 U.S. Gulf of Mexico
Discoverer 534 1975/1991 U.S. Gulf of Mexico
Discoverer Enterprise 1999 U.S. Gulf of Mexico
Discoverer Spirit 2000 Astano Shipyard
Discoverer Deep Seas 2000 Astano Shipyard
Jackup Rigs
Transocean Jupiter 1981/1997 UAE
Transocean Comet 1980 Gulf of Suez, Egypt
Transocean Mercury 1969/1998 Gulf of Suez, Egypt
Transocean III 1978/1993 UAE
Shelf Explorer 1982 Danish North Sea
Transocean Nordic 1984 Holland
(A) Dates shown are the original service date and the date of the most
recent upgrade, if any.
(B) Participating in a cooperation agreement with Statoil.
(C) Owned by Arcade Drilling as, a Norwegian company in which the Company
has a 25% interest and which is controlled by another contract
drilling company.
Sedco Forex Offshore Fleet
Type and Name Year Entered Service/Upgraded (A) Location
Semisubmersibles
Cajun Express Newbuild Shipyard (Singapore)
Sedco Energy Newbuild Shipyard (France)
Sedco Express Newbuild Shipyard (France)
Sedco 600 1983 Malaysia
Sedco 601 1983 Indonesia
Sedco 602 1983 Singapore
Sedco 700 1973/1994 Turkey (in route)
Sedco 702 1973/1992 Australia
Sedco 703 1973/1995 Australia
Sedco 704 1974/1992 U.K. North Sea
Sedco 706 1976/1994 U.K. North Sea
Sedco 707 1976/1997 Brazil
Sedco 708 1976 Angola
Sedco 709 1977/1998 Nigeria
Sedco 710 1983 Brazil
Sedco 711 1982 U.K. North Sea
Sedco 712 1983 U.K. North Sea
Sedco 714 1983 U.K. North Sea
Sedneth 701 1972/1993 U.K. North Sea
Sovereign Explorer 1984 U.K. North Sea
Actinia 1982 Spain
Sedco 135D 1966 Brazil
Drillstar (B) 1982 U.K. North Sea
Sedco Explorer (B) 1975/1995 U.K. North Sea
Omega (C) -- S. Africa
FPS Bill Shoemaker (D) -- Canada
Sedco I-Orca (D) -- S. Africa
Drillships
Sagar Vijay (D) -- India
Joides Resolution (E) -- Research Project
Jackups
Trident 2 1977 India
Trident 4 1980/1998 Angola
Trident 6 1981 Nigeria
Trident 8 1981 Nigeria
Trident 9 1982 Vietnam
Trident 12 1982 Brunei
Trident 14 1982 Angola
Trident 15 1982 Vietnam
Trident 16 1982 Thailand
Trident 17 1983 Vietnam
Trident 20 (F) Newbuild Singapore/Baku
Tender Rigs
Searex 10 1983 Congo
Searex 5 1983 Malaysia
Searex 11 1983 Indonesia
Searex 9 1981 Congo
(A) Dates shown are the original service date and the date of the most
recent upgrade, if any.
(B) 25% owned and bareboat chartered.
(C) Bareboat chartered.
(D) Management contract.
(E) 50% owned.
(F) 75% owned.
SOURCE Transocean Offshore, Inc.
CO: Transocean Offshore, Inc.; Schlumberger Limited
ST: Texas
IN: OIL
SU: TNM
07/12/99 08:10 EDT prnewswire.com
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