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UPDATE 1-U.S. rig contractor Ensco plans to rebase to UK
November 9, 2009 / 6:24 PM / 8 years ago

UPDATE 1-U.S. rig contractor Ensco plans to rebase to UK

* Ensco to move domicile from Delaware, execs from Dallas

* Removal from U.S. indexes looms, Ensco shares down 1 pct

By Braden Reddall

SAN FRANCISCO, Nov 9 (Reuters) - Ensco International Inc (ESV.N) is setting off on what is now a well-worn route to Europe for oil and gas drilling rig contractors, by laying out plans to relocate its corporate headquarters to the UK.

Ensco said achieving a global effective tax rate comparable to rivals was one reason for the move, along with improved access to both European institutional investors and its clients outside the depressed North American drilling market.

While larger rivals Transocean Ltd (RIG.N) and Noble Corp (NE.N) chose Switzerland when they moved in the past year, citing similar reasons, Ensco said in a statement that it already had substantial operations in Britain.

Ensco’s company domicile will shift from Delaware, while most of its top executives will move to Britain from Dallas.

This marks a reversal of fortune for the Texas city, which in the past four years has seen big U.S. companies such as Fluor Corp (FLR.N), AT&T Corp (T.N) and Comerica Inc (CMA.N) move their headquarters to the Dallas area.

Transocean and Noble both moved their domiciles from the Cayman Islands, which analysts put down to the relatively better protection provided by Swiss tax treaties if the U.S. government cracks down on offshore earnings. [ID:nL9640866]

Analysts have wondered if Bermuda-based Nabors Industries Ltd (NBR.N), the fifth-largest U.S.-listed rig contractor, might follow in their tracks.

Among the top five, with Ensco gone, only Houston-based Diamond Offshore Inc (DO.N) would retain a U.S. domicile.

Simmons & Co analysts noted Ensco’s effective tax rate was already in the high teens.

“We would not necessarily jump to the conclusion that this move will be tax rate enhancing so much as tax rate preserving,” they wrote in a note to clients.

The analysts also said that, while the removal of Transocean from leading U.S. stock indexes did weigh on its shares, Noble’s withdrawal had little perceptible impact on its stock price.

The shares of Ensco, with a market capitalization of nearly $7 billion, were down 1 percent in afternoon trading, while the Philadelphia Stock Exchange oil service index .OSX was more than 3 percent higher as crude oil prices rose.

Assuming the plan is approved by shareholders on Dec. 22, the new UK parent company will be known as Ensco International Plc. Ensco did not say where the UK headquarters would be, but it already has an office in the Scottish oil hub of Aberdeen.

A spokesman could not immediately be reached for comment.

The company said its new stock would be American depositary shares traded under the same “ESV” symbol on the New York Stock Exchange and it would continue reporting results in dollars. (Reporting by Braden Reddall; editing by Andre Grenon)

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