Summary
Ensco announced that its Board of Directors has approved a plan to change the company's corporate structure. Ensco's legal domicile would change from Delaware to the U.K. Most of the senior officers would be based in the U.K. where the company has substantial operations. The move will enhance management efficiency, improve access to key customers, enhance access to European investors improve perceptions that Ensco is a global offshore drilling contractor and reduce tax rates.
Analysis
Ensco follows supergiant drilling contractors and Nabors and Transocean out of the U.S.A. and joining oil field service companies service companies Weatherford International, Halliburton and Schlumberger as expatriate companies. Except for Schlumberger which has always had its headquarters in France, these are American companies who have abandoned their traditional headquarters in Dallas, Texas, Weatherford, Texas and Duncan,Oklahoma. Why are they doing this? Why have these moves occurred in the last few years? The companies say that their business is international and that activity in the U.S.A continues to decrease over the years. The big jobs are overseas. Still, it is reasonable to ask if financial and regulatory burdens in the U.S.A. have contributed to the migration. More importantly, will the 3 major U.S. oil companies also jump ship? ExxonMobil generates about 80% of its income from outside the U.S. Chevron and Continental have significant foreign operations. Recently both ExxonMobil and Chevron have decided to greatly reduce their presence in the American retailing market. Regardless of the usual management statements about why they are leaving, the facts suggest that big companies, particularly big energy companies are losing confidence in the policies of the U.S. government. Higher taxes are a given. Taxes on carbon emissions are looming. Regulations become increasingly burdensome. And then there is a looming problem with the dollar. An extremely large portion of oil industry business is conducted in U.S. dollars. Some nations are losing confidence in the dollar. Could it be that American companies are trying to insulate their treasuries from the consequences of a dollar collapse?
