Denmark’s Maersk Drilling has agreed to merge with US rival Noble Corporation in an all-stock deal to create one of the largest offshore oil drilling rig companies in the world.

According to a Reuters report, the combined market capitalisation of the two companies is estimated to be $3.4bn.

As agreed, the shareholders of the two companies will each own nearly 50% of the outstanding shares of the combined company.

The combined firm will be named Noble Corporation and will have a modern, high-end fleet of 20 floaters and 19 jack-up rigs. The shares of the firm are planned to be listed in both Copenhagen and New York.

It will be headquartered in Houston, Texas.

However, the combined entity will maintain a significant presence in Stavanger, Norway. This would allow the firm to retain proximity to customers while supporting operations in the Norwegian region and the broader North Sea.

Additionally, the combination is expected to generate annual run-rate synergies of $125m, benefitting the shareholders.

Noble board of directors chairperson Charles M (Chuck) Sledge said: “The combination of Noble and Maersk Drilling will create a leading offshore driller with global scale, a strong balance sheet and significant free cash flow generation potential.”

Upon completion of the transaction, Noble CEO Robert Eifler will become president and CEO of the merged business.

The transaction may lead to job cuts to help in reducing costs, the companies warned.

Maersk Drilling CEO Jorn Madsen was quoted by Reuters as saying: “In the short term the combination will, unfortunately, impact our organisation, but it will also create a larger and stronger company, which will provide future opportunities for growth and new jobs.”

The transaction is subject to approval from Noble shareholders, merger clearance, acceptance of the exchange offer by at least 80% of Maersk Drilling shareholders, and other regulatory approvals. It is expected to close in mid-2022.