ENSCO International purchases Chiles Offshore Inc. for 7.79 times revenue

Weekly Corporate Growth Report, May 20, 2002

The Deal: ENSCO International has signed a definitive merger agreement in which it agrees to purchase Chiles Offshore Inc. For each share of Chiles stock, shareholders will receive 0.6575 shares of ENSCO plus $5.25 in cash, for a total value of $28.50 per share, based on the value of ENSCO stock at the time the deal was announced. The transaction has been approved by the boards of both companies.

Discussion: Chiles Offshore operates three ultra-premium jack-up drilling rigs in the Gulf of Mexico. Chiles owns two of these rigs and operates the third under a charter arrangement. The company is building a fourth rig in Singapore. Ultra-premium rigs can drill deeper and are faster and more reliable than conventional jack-ups.

ENSCO is a leading offshore drilling contractor. The company owns 54 offshore rigs, including barge rigs, platform rigs, and one semisubmersible. The company operates in Latin America, Europe, and the Asia/Pacific region, as well as U.S. operations in the Gulf of Mexico. The company's marine unit provides support services to oil and gas firms in the Gulf with a fleet of 23 supply vessels, and five anchor-- handling tugs.

After the merger is completed, the combined company will have 56 offshore drilling rigs (including the one Chiles currently has under construction). The acquisition of Chiles will increase ENSCO's exposure to the premium jack-up market, according to Carl Thorne, ENSCO's Chairman and CEO.