This guide provides a comprehensive educational overview of Sedco Forex Schlumberger — the offshore drilling business unit of Schlumberger Limited, its spin-off, merger with Transocean, and its legacy in the oilfield services industry. We cover its history, business operations, practical use cases, evaluation criteria, and the risks inherent in the offshore drilling sector.
Sedco Forex Schlumberger refers to the offshore contract drilling business that was once a division of Schlumberger Limited, the world's largest oilfield services company. The name "Sedco" originated from Southeastern Drilling Company, which had a long history in the offshore drilling industry. "Forex" was derived from the company's international operations, reflecting its global reach. Together, Sedco Forex represented a major force in offshore drilling, operating a large fleet of mobile offshore drilling units (MODUs) around the world.[reference:0]
Schlumberger, founded in 1926, is a global technology company that provides services and equipment to the oil and gas industry. Its core businesses include reservoir characterization, drilling, production, and processing. However, by the late 1990s, Schlumberger made a strategic decision to exit the offshore drilling business to focus on its higher-margin technology and services offerings. This led to the spin-off of Sedco Forex and its subsequent merger with Transocean Offshore Inc.
According to the U.S. Securities and Exchange Commission (SEC) filings, the spin-off and merger were completed in a transaction valued at approximately $3.61 billion, creating the world's largest offshore drilling company at the time.[reference:3] The Federal Reserve and other regulatory bodies have monitored the oil and gas industry's consolidation trends, which have significant implications for energy markets and global economic stability.
Sedco Forex Schlumberger was not a standalone company but rather a business unit that was spun off and merged to become part of what is now Transocean Ltd. (NYSE: RIG), one of the world's largest offshore drilling contractors.
The history of Sedco Forex is intertwined with the broader consolidation of the offshore drilling industry, which accelerated in the late 1990s. The corporate lineage of Transocean Sedco Forex can be traced back to The Offshore Company, incorporated in Delaware in 1953, which later became Sonat Offshore Drilling Inc.[reference:4] Sedco itself had a rich history as a leading offshore drilling contractor, and its combination with Schlumberger's drilling assets created a formidable player in the market.
In 1999, Schlumberger's management decided to spin off its offshore contract drilling business to shareholders. The rationale was to allow Schlumberger to concentrate on its core technology and services businesses, which offered higher margins and more predictable revenue streams. The spin-off was approved by Schlumberger shareholders at a special general meeting on December 10, 1999, with 371,661,164 shares voted in favor.[reference:6]
On December 30, 1999, Schlumberger completed the spin-off of Sedco Forex Holdings Limited. Each Schlumberger shareholder received one share of Sedco Forex for each share of Schlumberger common stock held as of December 20, 1999.[reference:7][reference:8]
The spin-off was immediately followed by a merger. On December 31, 1999, Sedco Forex merged with a subsidiary of Transocean Offshore Inc.[reference:9] The resulting company was named Transocean Sedco Forex Inc.[reference:10] Under the terms of the merger, approximately 109.6 million ordinary shares of Transocean Offshore were issued to Schlumberger stockholders, equivalent to 0.1936 shares of Transocean Sedco Forex for each outstanding Schlumberger share. Following the merger, Schlumberger stockholders held about 52 percent of the approximately 210.1 million outstanding shares of Transocean Sedco Forex.[reference:11]
The New York Times reported on the transaction, noting that it created the world's largest offshore drilling company and that Schlumberger was "getting out of offshore rig rentals to concentrate on developing technology that gets more oil out of wells." The combined company began trading on the New York Stock Exchange under the symbol "RIG" and was identified by the new CUSIP number G90078 10 9.[reference:13]
Schlumberger retained no ownership interest in the merged entity, effectively exiting the offshore drilling business entirely.[reference:14] This strategic pivot allowed Schlumberger to focus on its core oilfield technology and services businesses.
Sedco Forex, and subsequently Transocean Sedco Forex, provided contract offshore drilling services to major oil and gas companies around the world. The business model was based on contracting drilling rigs to clients at a day rate, typically under long-term or short-term contracts.[reference:15]
At the time of the merger, Transocean Sedco Forex had the world's largest offshore rig fleet, totaling 74 to 75 mobile offshore drilling units.[reference:16][reference:17] The fleet included:
The company's fleet was located throughout the world's major oil and gas drilling regions, including:
Transocean Sedco Forex specialized in technically demanding segments of the offshore drilling business, including deepwater and harsh environment drilling services.[reference:24] The company was known for its expertise in drilling in challenging conditions, such as the North Sea, where it had operated since the 1960s.[reference:25]
The offshore drilling industry is highly cyclical and capital-intensive. Day rates and utilization rates are heavily influenced by global oil and gas prices, making it a volatile business environment.
Offshore drilling companies like Sedco Forex and Transocean Sedco Forex serve a variety of stakeholders in the oil and gas industry. Below are the most common use cases and a practical scenario.
Companies like ExxonMobil, Shell, and BP contract offshore drilling rigs to explore and produce oil and gas in deepwater and frontier regions. They rely on drilling contractors for specialized expertise and equipment.
State-owned entities such as Petrobras, Saudi Aramco, and Statoil (now Equinor) use offshore drilling services to develop their domestic hydrocarbon resources.
Smaller E&P companies may contract drilling rigs for specific projects, often in partnership with larger operators or through joint ventures.
Offshore drilling vessels have been used for scientific purposes, such as the JOIDES Resolution Ocean Drilling Program, which used the SEDCO FOREX research vessel in July 1991 to drill into the Earth's crust.[reference:26]
A major oil company discovers a promising oil field in the deep waters of the Gulf of Mexico, at a depth of 8,000 feet. The company needs a specialized deepwater drillship to drill exploratory wells. It contracts Transocean Sedco Forex, which deploys one of its advanced drillships to the location. The rig operates 24/7, drilling multiple wells over a period of several months. The oil company pays a day rate for the rig and related services, while Transocean Sedco Forex provides the equipment, crew, and technical expertise. The project successfully confirms the presence of commercial quantities of oil, leading to further development.
If you are considering an investment in, or partnership with, an offshore drilling company like Transocean (the successor to Sedco Forex), the following checklist outlines key evaluation criteria.
The U.S. Securities and Exchange Commission (SEC) requires publicly traded companies like Transocean to file detailed annual reports (Form 10-K) and quarterly reports (Form 10-Q) that provide extensive financial and operational information. These filings are valuable resources for evaluating the company's performance and risks. The Financial Industry Regulatory Authority (FINRA) also provides investor education materials that can help you understand how to analyze companies in cyclical industries.
Always verify current financial and operational data directly from the company's investor relations website or through SEC filings. Industry conditions change rapidly, and past performance is not indicative of future results.
The table below compares Transocean (the successor to Sedco Forex Schlumberger) with other major offshore drilling contractors. All data is based on publicly available information and is subject to change.
| Feature | Transocean (RIG) | Valaris (VAL) | Noble Corporation (NE) |
|---|---|---|---|
| Fleet Size (approx.) | ~40 rigs | ~40 rigs | ~30 rigs |
| Focus | Deepwater and harsh environment | Deepwater and jackups | Deepwater and jackups |
| Geographic Presence | Global (Gulf of Mexico, North Sea, Brazil, etc.) | Global | Global |
| Founded (current entity) | 1999 (merger of Transocean and Sedco Forex) | 2021 (emerged from bankruptcy) | 2021 (merged with Pacific Drilling) |
| NYSE Ticker | RIG | VAL | NE |
| Key Differentiator | Legacy of Sedco Forex, deepwater expertise | Diverse fleet, strong jackup presence | Modern fleet, focus on safety |
Data compiled from publicly available sources as of July 2026. Fleet sizes and business strategies are subject to change. Always verify current information directly from the companies' investor relations pages.
The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) provide educational resources on energy markets and the risks associated with commodity price volatility. Understanding these dynamics is essential for evaluating companies in the offshore drilling sector.
Investing in or contracting with offshore drilling companies involves significant risks. The industry is highly cyclical, with revenues and profitability heavily dependent on global oil and gas prices. Operational risks include accidents, blowouts, equipment failures, and environmental disasters. Regulatory changes, geopolitical instability, and technological disruptions can also impact the industry.
Never make investment decisions based solely on historical performance. This guide is for educational purposes only and does not constitute personalized financial, legal, or tax advice.
For authoritative guidance on evaluating energy sector investments, refer to the Financial Industry Regulatory Authority (FINRA) investor education materials and the U.S. Securities and Exchange Commission (SEC) investor resources. These organizations provide impartial information to help you make more informed investment decisions.