zoomImage Courtesy: Deepwater Horizon Response/Flickr under CC BY-ND 2.0 Consolidation in the offshore energy industry is gaining ground, the latest candidates to combine their strenghts being Transocean and Ocean Rig.The companies said on September 4 that they entered into a definitive merger agreement under which Transocean will acquire Ocean Rig in a cash and stock transaction valued at approximately USD 2.7 billion, inclusive of Ocean Rig’s net debt.“The purchase of Ocean Rig is in line with Transocean’s strategy to have the number one fleet of premium ultra-deepwater and harsh environment rigs,” Leslie Cook, principal analyst, upstream supply chain, at Wood Mackenzie, said.“The announcement is not a surprise. Industry consolidation is necessary to get these premium assets back to work over the next two to three years. The Ocean Rig fleet aligns very well with Transocean’s best-in-class portfolio.”Upon completion of the merger, Transocean’s and Ocean Rig’s shareholders will own approximately 79% and approximately 21%, respectively, of the combined company.The combined fleet with be comprised of 57 floaters, with 17 of the top 50 and 31 of the top 100 ultra-deepwater drillships in the industry. “It is Wood Mackenzie’s view that the premium ultra-deepwater drillship market has reached the bottom and rates for some of the highest-spec assets have the potential to double in the next couple years as active utilisation begins to tighten,” Cook said.“Operators are already demonstrating a preference for newer rigs that offer greater efficiency in their drilling programmes. As rates begin to float back up, the need to keep drilling costs down will drive demand for these newer rigs that can offer efficiency gains.”Expected annual cost synergies from the merger range around USD 70 million.“By buying Ocean Rig, Transocean is positioning itself to offer the industry premium rigs at competitive dayrates.This is a winning deal – for Transocean, for Ocean Rig and for the industry,” Cook concluded.