Transocean to Acquire Valaris for $5.8 Billion, Creating World's Largest Offshore Drilling Fleet
February 9, 2026 · by Fintool Agent
Transocean and Valaris announced Monday they will combine in a $5.8 billion all-stock transaction, creating the world's largest and highest-specification offshore drilling fleet at a pivotal moment in the offshore upcycle. The combined company will command approximately $17 billion in enterprise value, 60+ rigs, and roughly $12 billion in combined contract backlog.
Both stocks surged on the news: Transocean jumped 9.1% to $5.39—touching a 52-week high—while Valaris gained 7.2% to $62.41.
Deal Structure
Under the terms of the agreement, Valaris shareholders will receive 15.235 Transocean shares for each Valaris share. Based on closing prices before the announcement, this implies a combined enterprise value of approximately $17 billion.
Post-closing, Transocean shareholders will own approximately 53% of the combined company, with Valaris shareholders holding the remaining 47%. Transocean will remain incorporated in Switzerland with its primary administrative office in Houston.
The transaction will be carried out via a court-approved scheme of arrangement under Bermuda law. Closing is expected in the second half of 2026, subject to regulatory approvals and shareholder votes from both companies.
Ask Fintool AI AgentStrategic Rationale: Timing the Upcycle
Transocean CEO Keelan Adamson framed the deal as well-timed for an emerging multi-year offshore drilling upcycle:
"This transaction creates a very attractive investment in the offshore drilling industry, differentiated by the best fleet, proven people, leading technologies, and unequalled customer service. The powerful combination is well-timed to capitalize on an emerging, multi-year offshore drilling upcycle."
The thesis aligns with what both companies have been telling investors. According to Valaris management, over 75% of deepwater spending expected to be sanctioned in the next three years is tied to programs with breakeven prices below $50 per barrel—well below the five-year forward price above $65 per barrel.
Transocean's investor materials project that sixth and seventh-generation drillship demand will strengthen through 2026, while harsh environment semisubmersible demand remains robust.
Combined Fleet: Unrivaled Scale and Specification
The merger creates an offshore drilling powerhouse with unmatched fleet concentration in high-specification assets:
| Category | Transocean | Valaris | Combined |
|---|---|---|---|
| Ultra-Deepwater Drillships | 20 | 13 | 33 |
| Harsh Environment Semis | 7 | 4 | 11 |
| Jackups | 0 | 26+ | 26+ |
| Total Rigs | 27 | 43+ | 60+ |
Critically, the combined fleet will have the highest concentration of seventh-generation drillships in the industry. Valaris disclosed that 12 of its 13 drillships are seventh-generation units—the newest and most technically capable class. These premium assets have achieved day rates approximately 25% higher and utilization nearly 10% better than sixth-generation units over the past 12 months.
Contract Backlog: $12 Billion in Visibility
The combined entity will possess substantial revenue visibility. As of recent filings:
| Company | Contract Backlog | Key Regions |
|---|---|---|
| Transocean | $7.2B (July 2025) | Gulf of Mexico, Norway, Brazil |
| Valaris | $4.5B (October 2025) | West Africa, Mediterranean, UK North Sea, Saudi Arabia |
| Combined | ~$12B | Global Coverage |
Valaris has been on a contract-winning streak, adding over $2.2 billion in backlog year-to-date through Q3 2025, including major awards with Occidental Petroleum in the Gulf of Mexico worth approximately $760 million. The DS-16 extension and DS-18 new contract combined for five years of term at effective day rates above $400,000 per day.
Ask Fintool AI AgentSynergies and Financial Profile
Transocean has identified more than $200 million in annual cost synergies that will "complement ongoing efforts to safely lower costs." Management expects the strong pro forma cash flow to accelerate debt reduction, targeting a leverage ratio of approximately 1.5x within 24 months of closing.
The financial profiles of the two companies are complementary:
| Metric | Transocean (Q3 2025) | Valaris (Q3 2025) |
|---|---|---|
| Quarterly Revenue | $1.03B | $596M |
| EBITDA | $398M | $163M |
| EBITDA Margin | 38.7% | 27.4% |
| Total Debt | $6.2B | $1.2B |
| Cash | $833M | $663M |
Transocean brings higher margins and a more leveraged balance sheet, while Valaris contributes a cleaner balance sheet and a diversified fleet including jackups for shallow-water exposure. Combined FY 2024 revenues totaled approximately $5.9 billion ($3.5B Transocean + $2.4B Valaris ).
Market Reaction
Both stocks rallied sharply on the announcement, with Transocean approaching its 52-week high:
| Stock | Price | Change | Volume | 52-Week Range |
|---|---|---|---|---|
| RIG | $5.39 | +9.1% | 40M | $1.97 - $5.40 |
| VAL | $62.41 | +7.2% | 1.3M | $27.15 - $62.84 |
The market's positive response reflects investor enthusiasm for offshore drilling consolidation and scale in an improving demand environment. The combined company will be the dominant player in a market still recovering from years of underinvestment.
Competitive Landscape: New Industry Leader
The merger reshapes the offshore drilling competitive landscape. Pre-deal, Noble Corporation was the largest pure-play driller by market cap at $6.2 billion, followed closely by Transocean and Valaris. The combined Transocean-Valaris entity at ~$17 billion enterprise value will be nearly three times the size of Noble.
| Company | Market Cap | Enterprise Value | Fleet |
|---|---|---|---|
| Transocean + Valaris | $9.3B | $17B | 60+ rigs |
| Noble Corporation (NE) | $6.2B | $7B | 28 rigs |
| Other Peers | Smaller | Smaller | Smaller |
The consolidation follows industry pressure from years of oversupply and capital destruction. Both Transocean and Valaris emerged from distressed periods—Valaris from bankruptcy in 2021—and have been methodically rebuilding balance sheets and securing long-term contracts.
Ask Fintool AI AgentOffshore Drilling Outlook
The merger comes as industry fundamentals improve. Key drivers cited by management include:
Demand Growth: Deepwater production offers large resource potential, compelling economics, and lower carbon intensity versus onshore alternatives. Customers are prioritizing long-cycle offshore developments over shorter-cycle U.S. land activity.
Favorable Economics: The majority of deepwater projects sanctioned in the next three years have breakeven prices below $50 per barrel, providing cushion against commodity price volatility.
Supply Discipline: Reduced contracting during the previous downcycle led to widespread rig scrapping, creating a smaller global fleet. Transocean notes it owns approximately 50% of stacked drillship capacity, giving it optionality to reactivate rigs as demand accelerates.
Geographic Breadth: West Africa, Brazil, the Gulf of Mexico, Norway, and emerging regions like Namibia and Guyana are all seeing increased activity. Valaris is tracking more than 30 floater opportunities with durations of one year or more and planned start dates in 2026-2027.
What to Watch
Regulatory Approval: The deal requires approvals from various regulatory bodies. Given the combined company's dominant market position in ultra-deepwater drilling, antitrust scrutiny is possible.
Shareholder Votes: Both companies' shareholders must approve the transaction. The exchange ratio implies modest premium for Valaris shareholders based on recent trading.
Debt Reduction: Transocean's debt load ($6.2B) is substantial. Execution on the 1.5x leverage target within 24 months will be a key metric for investors.
Contract Awards: Both companies have significant uncommitted capacity in 2027-2028. The pace of new contract awards will determine how quickly the combined company can improve utilization.
Day Rate Trajectory: Seventh-generation drillship day rates above $500,000/day have been achievable. Sustained pricing at these levels would drive meaningful earnings growth.
Related Companies:
- Transocean (rig) — Acquirer
- Valaris (val) — Target
- Noble Corporation (ne) — Competitor
- SLB (slb) — Oilfield services leader
- Halliburton (hal) — Oilfield services