Westwood Insight – Transocean and Valaris merger shakes up the offshore drilling industry in Oil & Companies News 17/02/2026 Transocean and Valaris announced a merger on 9 February 2026 in which Transocean will acquire Valaris in an all-stock transaction valued at approximately $5.8 billion. The pending transaction has a target close date in the second half of 2026. If finalised, it would result in a combined company with 73 offshore rigs, comprised of 33 ultra-deepwater (UDW) drillships, nine semisubmersibles and 31 jackups. The combined backlog value is approximately $10 billion. The need for more consolidation among offshore rig contractors has been a topic of discussion for some time, as the number of rigs vying for open requirements reaches into the double-digits at times, making it difficult for rig managers to have much pricing power when it comes to their offers. These situations can also affect the duration from tender to award, as more time is needed by operators to assess all the offers fairly. Meanwhile, consolidation among operators reduces the pool of potential clients for offshore rig contractors. A few examples from recent years include Woodside acquiring BHP, Harbour Energy acquiring both Wintershall Dea and LLOG Exploration, and Chevron acquiring Hess. Combine fewer potential clients with rig technology that has greatly reduced drilling time over the years, and too many competitors quickly add up. Bring in the high-cost environment resulting from global inflation, and a situation has evolved in which costs such as labour, equipment and services have generally been rising, while rig dayrates have struggled to maintain upward momentum. While lower dayrates are a positive for the operators leasing the rigs, rates that are too low make it a struggle for some rig owners to survive. Furthermore, with the expectation of ongoing supply constraints, with few new rigs entering the market in the past several years and new orders financially unfeasible for most offshore rig contractors, Transocean is positioning itself for an uptick in demand by focusing on high-specification rigs across asset types and regions. From this perspective, even the cold-stacked floaters bring meaningful value to the transaction, as some of these will be reactivation candidates when market conditions call for adding capacity. Transocean returns to jackup world This merger would mean the return of Transocean to the jackup market for the first time since it spun off its jackup fleet in 2017 as it transitioned to a pure deepwater play company. At the time, Borr Drilling acquired from Transocean 10 high-specification jackups and five others that were under construction. Transocean has indicated its intent to keep the jackups, noting it sees the segment as an opportunity to add cash flow. Of the 31 jackups owned by Valaris, six are currently managed by ARO Drilling, which is a 50:50 joint venture between Valaris and Saudi Aramco. This leaves 25 jackups under the direct management of Valaris. Since Transocean does not currently manage any jackups, the ranking of the post-merger company would only result in changing the name to Transocean, which would remain tied for fourth place with Borr Drilling. Out of the 31 owned jackups Valaris brings to the deal, 24 are marketed for work (five managed by ARO and 19 managed by Valaris). Nearly 40% of the marketed units are in the North Sea, bringing increased exposure for Transocean to this region, where it currently ha