July 3, 2018 / 4:15 PM / a year ago

Seadrill CEO sees consolidation speeding up drilling market recovery

OSLO, July 3 (Reuters) - Consolidation among smaller offshore oil rig companies would help to boost a recovery in the drilling market, the CEO of offshore rig firm Seadrill said on Tuesday, a day after it emerged from Chapter 11 bankruptcy proceedings.

Seadrill started trading new shares on the New York Stock Exchange on Tuesday and plans to list new shares on the Oslo Stock Exchange by end of July or beginning of August.

Shares of Seadrill, controlled by Norwegian-born billionaire John Fredriksen, opened at $25 a share, but slid to $18 a share by 1508 GMT.

Once the world’s largest offshore driller by the market capitalisation, Seadrill had to seek protection from creditors last September after being hit by prolonged oil market downturn which started in 2014.

Oil prices have partly recovered since hitting a low in January 2016, and demand for drilling rigs is up.

Chief Executive Anton Dibowitz said consolidation of smaller players could help the drilling market’s recovery.

“Anybody with the fleet of less than 10-15 rigs probably needs to be consolidated ... All who don’t have scale are candidates for consolidation,” he said.

While there has been a lot of talk about the need to consolidate fragmented rig market, there have been only a few significant deals so far.

Ensco acquired Atwood Oceanics, and Transocean bought Songa Offshore last year, while Borr Drilling took over Paragon Offshore this year.

Danish shipping group A.P. Moller-Maersk has been not yet found a buyer for its offshore drilling division, Maersk Drilling.

“Whether it (consolidation) comes from us or from smaller competitors, it will be positive,” Dibowitz said.

Seadrill itself was “comfortable” with the size and composition of its fleet, which includes 19 floating rigs and 16 jack-up rigs, he added.

Dibowitz said the upturn in the market was becoming stronger with the numbers of tenders and opportunities increasing.

He said the North Sea market had been “particularly attractive,” while demand for deep and ultradeep water drilling was up in Brazil, West Africa and U.S. Gulf of Mexico.

The CEO said the company had continued to provide drilling rigs to oil and gas firm during the bankruptcy proceedings, but it had been a drag on business.

“It would be absolutely easier for us to secure more work, because you don’t have that black mark or flag,” Dibowitz said in an interview.

A Seadrill spokesman said eleven out of the company’s 19 floating rigs and nine out of 16 jack-ups were employed or about to start work.

Dibowitz said the company would stick to its strategy to provide “any kind of asset in any market to any customer.. harsh, benign, shallow, deep.” (Reporting by Nerijus Adomaitis. Editing by Jane Merriman)

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