Oil driller merger is only partly defensive – Reuters

Oil driller merger is only partly defensive – Reuters

The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France, March 28, 2019. REUTERS/Christian Hartmann

GLASGOW, Nov 10 (Reuters Breakingviews) - Europe’s Maersk Drilling (DRLCO.CO) and U.S. rival Noble (NE.N) have droll timing. The pair announced a transatlantic merger on Wednesday, just as negotiators at Glasgow’s COP26 climate talks unveiled the first fruits of their labours. That included a draft pledge to phase out subsidies for fossil fuels. For the drillers, it thus sounds like a sensible time to roll out a deal that should generate nearly $1 billion of taxed and capitalised synergies. Against the duo’s $1.7 billion market capitalisations, that’s a chunky buffer against the approaching storm. With the International Energy Agency calling for an end to new oil or gas investment to limit global warming, drillers are living on borrowed time.

Or are they? The COP26 pledge unsurprisingly says nothing about what actually has to be done in the short term. And many delegates in the Scottish city privately admit that the current wave of energy-security scares means “responsible retirement” of fossil fuels is the order of the day. The driller merger, which is really a takeover by Noble, could end up generating cost savings in