In January, we reflected on the fragmented tail of offshore deepwater drilling contractors, observing that many were subscale, including Vantage Drilling, Eldorado, Foresea, Ventura Offshore and Etesco. That was even before the news that Transocean was taking over Valaris to create a 73-rig behemoth, with 33 deepwater drillships in the combined fleet. With ADES buying Shelf Drilling in late last year, and Borr Drilling acquiring Fontis Energy in Mexico and its fleet of five jackups, it is clear that the drilling industry continues to consolidate. The small need to merge or sell.
We had made the following observation:
“Longer term, a merger of El Dorado and Vantage would solve Vantage’s chronic problem of a lack of scale, and El Dorado’s problem of a lack of operating capability.
"Vantage might also provide a marketing channel for Keppel in Singapore. Keppel is stuck holding two harsh environment semisubs originally ordered by Awilco and the modern drillship Can Do, which it ordered speculatively in 2013 with spectacularly bad timing.”
Guess what? On May 29, Vantage Drilling International announced that it had entered into an agreement and a plan of merger with Eldorado Drilling. My initial reaction was… thank goodness for that. Two lame duck companies are getting together, and this can only be good for the drilling industry more widely.
Vantage shareholders will receive US$19 per share in cash, representing an equity value for the company of approximately US$257.6 million. If the deal doesn’t go through by the end of next month, there is a US$13.56 million break fee payable.
Eldorado will receive the full ownership of one sixth-generation drillship, the 2010-built Platinum Explorer, and 25 per cent ownership of the sister rig Tungsten Explorer, which is on long term charter to TotalEnergies in West Africa; TotalEnergies is also the owner of the remaining 75 per cent of the rig, following its buy-in to the 2013-built rig in August 2025 for US$199 million, which valued the remaining Vantage quarter ownership at US$67 million.
Vantage manages the rig for TotalEnergies under a ten-year firm contract. The good news for Vantage staff is that Eldorado us buying Vantage as much for its people as for its 1.25 drilling rigs. It is nice to see a deal which won’t be accompanied by widespread layoffs and “cost saving synergies.”
The deal is possible because finally, after two years of disappointment, Vantage has revenue visibility on its rig.
On February 10, 2026, Vantage received a binding notification of award from Indian state oil company ONGC for Platinum Explorer for a three-year firm contract valued at approximately US$261 million exclusive of MPD services, plus one-year optional campaign in India. That’s a day rate just shy of US$330,000 per day, which is not a great rate, but Vantage lacked options. If we subtract the value of the stake in Tungsten Explorer, the deal values the rig at around US$190 million, which is not bad for a 16-year-old unit.
The rig is currently en route from Labuan to the anchorage in Singapore and the contract is due to commence next month in India, as ONGC rules require that the drilling should commence no later than 180 days after the issuance of the notification.
This award was vital, as Platinum Explorer had been warm-stacked for all of 2025 and for ten months of 2024. Vantage was bleeding from its failure to fix the rig and had been grossly disappointed after a letter of award issued in April 2025 for a 260-day campaign with a Lukoil subsidiary for the rig was first delayed in July and then terminated with immediate effect in October. This was due to UK sanctions being placed on the ultimate owner of the client. This rendered the contract execution unlawful and therefore subject to termination.
In 2019, Vantage had owned eight rigs, but when the Covid crisis struck in 2020 it began to systematically sell down its fleet to pay down debt, scrapping Titanium Explorer for just over US$10 million at the end of 2020, and selling its jackups to ADES, leaving it with just the two drillships in 2025.
Losses from operations were offset by profits from the sale of its jackup fleet, and then Tungsten Explorer. Without the ONGC contract, Vantage looked very shaky. It burnt US$34.5 million in cashflow in its operations in 2025 as per its annual report, having also burnt through US$7 million in 2024.
Ihab Toma became CEO of Vantage in August 2016 after a brutal chapter 11 restructuring. He won a US$655 million lawsuit against Petrobras for the wrongful termination of Titanium Explorer in 2019 and has succeeded in achieving the exit. It’s been a profitable decade for him, but he has navigated the waters successfully, despite a small fleet and the Lukoil issues.
Now Eldorado has provided a farewell cheque for Vantage’s patient shareholders. The game was always to pay off all the debt and provide the shareholders with a parting payout at the exit.
One of the most curious statements around the mergers was Mr Toma’s comment:
“We are excited to join forces with Eldorado. Our teams share a commitment to safety, operational excellence, and customer success. This transaction strengthens our ability to invest in our people and assets, pursue high-quality opportunities across regions, and maintain the standards our customers expect.”
This is surprising because, as we have observed in the past, Eldorado has no operations. Eldorado may have a commitment to safety, but it doesn’t manage any rigs itself. It owns the drillship Atlantic Zonda, which is on long term charter with Petrobras in Brazil, but which is managed by Ventura Offshore. It has the right to acquire the deepwater drillship Deep Value Driller from its eponymous owner in Norway for US$300 million and has paid a US$70 million deposit, but this rig is on bareboat charter to Saipem. The company Deep Value Driller had never managed to rig itself in drilling operations, but the bareboat was very profitable – the company made US$23 million net profit before tax in 2025, as per its annual report.
It was always unclear how Eldorado would manage the stringent demands of the customers for safety and a proven operational track record when it finally takes over the drillship at the end of the Saipem contract in the third quarter of this year. Acquiring Vantage does indeed provide the operations experience and personnel needed to run Eldorado’s rigs.
The company has sought to speculate in deepwater drillships with a conspicuous lack of success. Having failed to charter its other two speculatively purchased rigs Draco and Dorado, Eldorado was compelled to sell them to Turkish state oil company TPAO in mid-2025 at less than its incurred costs and purchase price, after the company was hammered by expensive delays and budget overruns to mobilise and get Atlantic Zonda on-hire in Brazil.
“Eldorado is a company strong on strategy and weak on execution,” we noted that the time.
Eldorado is also going to be financially stretched in the coming months with a US$258 million obligation to buy Vantage and a US$230 cheque to write to Deep Value Driller when it closes the purchase of that company’s drillship.
Eldorado is backed by some of the Norwegians who believe themselves to be the smartest minds in shipping. The announcements note that principal shareholders of Eldorado have committed to provide US$125 million of equity funding for the transaction, which will consist of a US$64.5 million cash commitment and US$60.5 million through the conversion of an existing shareholder note into equity.
You don’t need to be a Clarkson or Fearnleys analyst to see that US$125 million of fresh equity is less than the US$257 million cash price for Vantage and less than the US$230 million balance payable for Deep Value Driller, a rig that doesn’t yet have a contract when it finishes with Saipem. More funds will be required.
Where could they come from? When it was founded, Elorado was backed by Tor Olav Trøim (the founder of Borr Drilling, the chairman of Golar LNG, and John Fredriksen’s ex-business partner), Harald Moraeus Hanssen (owner of the PSVs HM Flipper and MH Monsoon and other vessels), Petter Stordalen (art collector, philanthropist, and owner of downmarket hospitality chain Nordic Choice Hotels), Torstein Tvenge, Gunnar Hvammen, and Jan Haudemann-Andersen.
My guess is that there will be an IPO in Oslo for the business soon to raise equity to support some of the US$300 million of cash that has to be found in the coming months.
This would also make it easier for the company to use its stock, not cash for future acquisitions, and would make it simpler for an ultimate flip for the shareholders.
If SpaceX and various AI companies can hold IPOs, why not Eldorado?
The direction of Eldorado’s long-term business plan is probably best illustrated by its choice of Chairman of Bernie Wolford, the former CEO of Pacific Drilling, who led that company through two chapter 11 bankruptcies and then presided over its sale to Noble Corporation in early 2021. He then joined Diamond Offshore as CEO a few months later, and presided over its sale to, er, Noble Corporation in 2024. What could possibly be planned by the Norwegian investors for his third tenure as the head of a drilling contractor?
“Today’s announcement marks an important step in building a scaled, resilient offshore drilling platform,” Mr Wolford commented in the press release.
I would argue that the merger of Vantage and Eldorado is a minor step in the consolidation of the drilling industry. It will likely lead to an initial public offering in Oslo of Eldorado, an event that the untimely failure of the company’s Draco and Dorado plans derailed in 2025.
The deal steps up the pressure on Foresea, Constellation, Etesco and Ventura Offshore. Six will become five, but five is still too many.
In January, we breathlessly reported that Foresea and Ventura Offshore were in merger discussions. In Ventura’s recently released first quarter 2026 results presentation, there was no mention of any update on any merger or sale, and Forsea’s presentation was also completely silent on the situation. Now that Elorado has made its move on Vantage, this will be a spur to further consolidation.
There is also a longer-term question over the future of Northern Ocean, the John Fredriksen-owned Norwegian driller that owns the harsh environment semisub Deepsea Mira, having sold the sister rig Deepsea Bollsta to Odfjell Drilling for US$480 million at the end of 2025.
Deepsea Mira remains in Namibia trading on short-term exploration programmes as TotalEnergies continues to prevaricate the final investment decision on its Venus and Mopane discoveries in that country. Longer term, I suspect that as soon as the rig is awarded a multi-year contract, Northern will sell it to Odfjell.
The Vantage and Eldorado deal is one more piece in a sorely needed consolidation play in offshore drilling. It won’t be the last.