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Landmark offshore vessel merger a hair's breadth away

Get ready for a new offshore vessel player to make its presence felt

THE merger between Farstad Shipping, Solstad Offshore and Deep Sea Supply — creating a new giant offshore vessel supply company — is nearly complete.

Oslo-listed Farstad, which is already one of the world’s leading offshore vessel companies, said on Friday that the merger is now in its final stages, with key dates for completion to be announced soon.

The merged company will control more than 150 vessels.

Kjell Inge Røkke-controlled Aker Capital, which owns 39.4% of Solstad Offshore, and John Fredriksen’s indirectly-owned Hemen Holdings, which controls 31.4% of Deep Sea Supply, are the main players in the move that hopes to save NKr400m ($48.4m) to NKr650m on annual basis.

The merger would be Solstad’s second after one of its subsidiaries merged with Rem Offshore last year.

The latest merger comes as the offshore drilling market remains challenging, affecting demand for offshore supply vessels.

Drilling company Seadrill, owned by John Fredriksen, expects this challenging dynamic to continue in the short to medium term.

According to Seadrill, the majority of customers remain focused on conserving cash and are still reluctant to commit to significant new capital projects offshore until an increased consistency and upward trend in oil prices is demonstrated.

However, there is light at the end of the tunnel.

Market behaviour points increasingly to the market having reached its bottom, Seadrill forecast in its first-quarter results.

“Tendering activity continues to increase, especially in the North Sea, Southeast Asia and Middle East segments,” said Seadrill Management chief executive Per Wullf.

The merger mirrors the consolidation activity occurring in the tanker industry.

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