Energy Deals of the Day

Today, the best deal in the energy sector was the one left undone.

That's not to say that Transocean (NYSE: RIG) shareholders had nothing to cheer about. The company just scored four fresh contracts from sugar daddy Petrobras (NYSE: PBR). Each offshore drilling contract stretches for five or six years, for a total of 22 rig years. In total, the arrangements add around $3 billion to Transocean's ever-ballooning backlog.

Rig availability in the deepwater category has been very tight over the past few years. This has led explorers like Chevron (NYSE: CVX) and Anadarko (NYSE: APC) to scramble to secure rigs for future drilling programs. Petrobras, with its recently discovered offshore prize, is now single-handedly keeping the market tight well into the next decade with an extremely ambitious offshore push.

Even with the ordering of new vessels by the likes of Transocean and Atwood Oceanics (NYSE: ATW), Petrobras and its global competitors are sopping up supply like a crusty piece of bread. This means that Transocean and its brethren will remain breadwinners for years to come.

Now, back to that deal that didn't happen. Shareholders today voted down the proposed merger between Grey Wolf (AMEX: GW) and Basic Energy Services . Be still, my Foolish heart!

I've followed every twist and turn of this saga, from the puzzling prelude to the three-time rejection of rival suitor Precision Drilling Trust (NYSE: PDS). I threw my full writerly weight against the Basic Energy merger, and I'm overjoyed that shareholders saw fit to reject the subpar arrangement.

The story isn't over. Precision's offer of $10 per share still stands, and Grey Wolf has announced that it has hired a banker to help evaluate strategic alternatives. Will Grey Wolf finally succumb to its Canadian suitor? We'll have to just stay tuned.

Copyright © 2008 Universal Press Syndicate.