Tags: US | Noble | Frontier | Acquisition

Noble Buys Frontier, Reaches Gulf Deal With Shell

Monday, 28 Jun 2010 01:28 PM

Offshore drilling services company Noble Corp. is bulking up its operations while signaling that business as usual won't return to the Gulf of Mexico for some time.

The Swiss company said Monday it will buy privately held Frontier Drilling for $2.16 billion in cash and also struck $4 billion worth of new contracts with Royal Dutch Shell.

Noble is also giving Shell the right to suspend any contracts the two have for rigs operating in the Gulf because of the proposed U.S. moratorium on drilling in deep water.

The agreements with Shell cover two ultra deepwater projects and are subject to closing the deal with Frontier.

Shell will pay reduced fees for leasing Noble's rigs in the Gulf. The Obama administration in May ordered a six-month halt on exploratory drilling in waters more than 500 feet deep. The ban is being disputed in the courts. Noble was stung earlier this month when Anadarko Petroleum said it planned to excuse itself from drilling contracts because of the moratorium.

Noble spokesman John Breed said the Shell deal is aimed at keeping oil companies from trying to abandon agreements altogether in the Gulf.

"We're working with our customers to find a resolution that would allow them to keep rigs under contract," Breed said.

Argus Research analyst Phil Weiss said the decision suggests that oil companies are digging in for an extended delay in drilling projects in the Gulf. Even if the moratorium ends, many companies are reluctant to expand in the area until they see how the government will regulate business there, he said.

"If this was going to be a short moratorium, they wouldn't have had to come up with these kinds of solutions," Weiss said.

The Frontier deal is expected to close by the end of July. It would add six floating drilling units to Noble's fleet.

Noble said it should take on loans from existing lines of credit to complete the deal for Frontier, also known as FDR Holdings Limited.

Noble shares added $1.71, or 5.8 percent, to $30.99 in morning trading.

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Offshore drilling services company Noble Corp. is bulking up its operations while signaling that business as usual won't return to the Gulf of Mexico for some time.The Swiss company said Monday it will buy privately held Frontier Drilling for $2.16 billion in cash and also...
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2010-28-28
Monday, 28 Jun 2010 01:28 PM
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