(Reuters) – Noble Corp and a consortium comprising Transocean Ltd and Dolphin Drilling are competing to acquire the assets of Seadrill Ltd, the bankrupt offshore oil driller controlled by Norwegian-born magnate John Fredriksen, people familiar with the folder.
Seadrill is trying to come out of its second U.S. Chapter 11 bankruptcy in four years: Like many in the industry, it developed its drilling rigs too aggressively in the mid-2010s to withstand a subsequent downfall energy prices and platform rental rates. He is negotiating an agreement to restructure its debt of more than $ 7 billion in exchange for handing over control of the company to its creditors.
U.S. Chapter 11 bankruptcy proceedings temporarily protect companies from creditors’ claims, allowing them to continue in business while giving them time to agree on debt restructuring plans, which are due to in turn be approved by a court.
Any takeover offer should bring more value to the creditors involved than the restructuring plan being negotiated. For buyers, acting now means they could get all of Seadrill’s assets back without taking on any of its debts.
The consortium of Transocean, Dolphin Drilling and a third party, whose identities could not be known, submitted an offer for Seadrill in early July, the sources said.
The offer consists of cash, shares of Transocean and an agreement to take over part of Seadrill’s existing debt, one of the sources said. Its value could not be learned.
The offer is still under review by the company, the source added.
Noble submitted an offer in May for the company’s asset base, according to a July 1 bankruptcy filing. Although the document shows that the offer was discussed by the company and its advisers, it did not detail the outcome of those considerations.
Noble, who himself came out of bankruptcy in February, remains interested in pursuing the offer, one of the sources said.
In a statement to Reuters, Seadrill said it recognizes the need for consolidation within the industry and will play an active role once its restructuring is completed later this year.
“Seadrill remains focused on restructuring our balance sheet,” the statement continued, adding that the company was working on filing its plan to support the plan, with backing from its secured lenders. The agreement legally obliges signatories to review the formal restructuring plan.
Transocean declined to comment. Dolphin Drilling and Noble did not respond to requests for comment.
Seadrill operates 43 rigs, which are hired by energy companies to drill for oil in shallow and deep water on all five continents, according to the company’s website. Its clients include Equinor, Petrobras and ConocoPhillips.