* Seadrill misses out on Pride after years of courting
* Pride shareholder vote on Ensco deal not fixed yet
* Seadrill could spend $3 bln-plus; eyes deepwater rigs
* Time ripe to do deals; rig demand heading higher
* Driller IPO interest shows small players aim to cash out
By Michael Erman and Braden Reddall
NEW YORK/SAN FRANCISCO, March 18 After being
jilted in its half-decade-long courtship of offshore oil
driller Pride International Inc PDE.N, Seadrill Ltd (SDRL.N)
should not have any trouble finding a new partner.
Seadrill was still trying to woo Pride when that company
agreed in February to a $7.3 billion union with Ensco Plc
(ESV.N), according to a recent filing by Ensco with U.S.
A combined Ensco/Pride would have the second-largest fleet
after Transocean Ltd RIGN.VX(RIG.N) and would also challenge
Seadrill for the sector's number-two spot by market value.
But Norway-listed Seadrill could nurse its wounds with
another partner, either as a buyer or seller, bankers said.
According to the filing, Seadrill first approached Pride
about a possible deal in July 2005. It acquired a stake nearing
10 percent in the U.S. driller, although never quite made an
Still, as recently as the day the Ensco deal was announced,
Seadrill told Pride it still wanted to make it happen.
That spurred some arbitragers and investors to speculate
that Seadrill might launch a rival bid, noting that Seadrill
shares are up about 10 percent since it suggested it could make
a cash-and-stock bid for Pride in November.
"I think they're going to keep all their options open until
right before the shareholder vote and then make a decision,"
one investor said. "But they've had a shot at this forever."
Yet Brian Uhlmer, an analyst at Global Hunter Securities,
felt that Pride investors were unlikely to abandon Ensco for
heavily indebted Seadrill.
"Because if we're looking at using stock as currency, I
don't think that the Pride shareholders have the same
philosophy as the people that own Seadrill, who believe in much
higher leverage ratios," Uhlmer said.
A Pride spokeswoman said the date of the shareholder vote
on the Ensco offer has not been fixed.
"HIGH-FIVES AND CRISTAL" FOR SEADRILL
Bankers agree a Seadrill counter-offer is unlikely because
it would have difficulty topping the 21 percent premium Ensco
offered, apart from the fact Seadrill will collect a tenth of
what Ensco pays for Pride anyway.
"I think the Seadrill guys were high-fiving each other and
opening bottles of Cristal when Ensco came in. They got a
premium on their stake," said one industry investment banker,
who could not be named because he was not cleared to speak
about the matter.
At the end of 2010, Seadrill had more than $900 million of
cash on hand. Moreover, the company suggested to Pride it would
be able to put up up to $2.5 billion in cash in a possible
deal, according to the filing. Add $700 million if Ensco
completes the Pride deal -- cash one banker expected the
company would want to spend on something else -- and Seadrill
is well positioned to find a new partner.
"If you look at that group of companies, they are
acquisitive by nature -- they've done more deals than anybody
else has over the last five years," he said.
Run by billionaire John "Big Wolf" Fredriksen, who is known
more as a master financier than a driller, Seadrill has made no
secret of its desire to grow its fleet through acquisitions.
Seadrill has had a New York Stock Exchange listing since
last April, signaling its intent to chase U.S. companies. Then
in September, Fredriksen said he was targeting smaller
companies with four to six deepwater rigs.
Among U.S. players, Atwood Oceanics Inc (ATW.N) would fit
the bill, but analysts see an impediment to any deal in the
stake, which now stands at 12 percent, that onshore driller
Helmerich & Payne Inc (HP.N) has held in Atwood for more than
Other possibilities Uhlmer sees would be Aker Drilling
AKD.OL, which completed an initial public offering last month
in Oslo, or the offshore drilling division of Denmark's Maersk
MAERSKb.COi -- owner of four deepwater rigs and 12 jackups.
Uhlmer also saw the potential for a deal with Houston-based
Pacific Drilling, which has interests in six ultra-deepwater
rigs and has indicated it is also looking at an IPO.
"You could cash out for the same amount," he said.
Mike Breard, with Hodges Capital Management in Dallas, said
broader economic conditions made the timing for buying a rig
contractor better than ever, since oil prices above $100 per
barrel ensured a quicker recovery in rig earnings.
"The easiest way to spend more money is to drill with it,"
Breard said. "Day rates are probably going to be much higher by
the end of this year than anybody suspects.
"At $100 oil or $80 oil, it doesn't matter what the price
of the rig is."
Seadrill was not available for comment.
(Reporting by Mike Erman and Braden Reddall; editing by Andre