The merger of Norway's two largest operators, Statoil and Hydro, is coming closer to fruition. Today, the Statoil corporate assembly endorsed the board of directors' plan and recommendations on the merger of the two companies. Additionally, and more importantly, Norwegian Oil Minister Odd Roger Enoksen stated yesterday that he felt confident that the European Union would agree to the merger between the two companies. Dow Jones quoted Minister Enoksen as saying "The market share in European countries of the new company will not be that substantial that it should be a problem," pointing to the fact that oil and gas supplied by the combined company would provide only about 16% of European consumption.
Statoil is the largest producer on the Norwegian shelf, with 989,000 boepd produced according to company statistics for the fourth quarter of 2006. Hydro is the second largest operator in Norway with 516,000 boepd coming from its assets as of the fourth quarter of 2006. The two companies' combined Norwegian production would be just over 1.5 million boepd.
StatoilHydro to Dominate Norwegian Rig Fleet
In terms of comparing these companies, Norsk Hydro has as many mobile rigs contracted as the six other operators combined, and Statoil has 50% more than Hydro. As such, Hydro accounts for 29% of the rigs contracted in Norway. Statoil accounts for 43% of the rigs contracted in the country. When the Statoil-Hydro merger is complete, the combined company will account for 72% of the rigs working offshore Norway. This dominance in terms of offshore rig contracts is clearly illustrated in the chart below which shows how much of the Norwegian offshore rig fleet is contracted to Statoil and Nrsk Hydro compared to the other operators in the country.
Norwegian Offshore Rig Contracts by Operator
The only aspect of offshore drilling occuring offshore Norway that is not dominated by Statoil and Hydro is the jackup market. Statoil is tied with ConocoPhilips as the leading jackup operator in the country, with two jackups each. Talisman and BP are currently each operating one jackup as well. So, of the six jackups contracted in Norway, only two (one-third) are contracted to Statoil or Hydro.
A Larger Smaller Role in the Outside World
When the merger is complete, the new StatoilHydro will have a much larger worldwide operational footprint, and be able to play a larger role in projects around the world. The company will be on much more equal footing with some of the largest non-state-owned operators such as BP, Shell, ExxonMobil and others when it comes to competing for resources in other areas outside of Norway. Plus, with a larger demand for rig time and being a largely state-owned firm, StatoilHydro should be able to negotiate more favorable rig day rates as time goes on.
For More Information on the Offshore Rig Fleet:
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