What happened

Shares of in-trouble offshore driller Seadrill Ltd. (NYSE:SDRL) had sunk 12% for the day at 3 p.m. EDT on May 30. They're now well into penny territory, at less than $0.50 per share. 

So what

Today's big price drop is probably a reaction to a few things. First, most offshore drillers were down today, as oil prices have continued to fall since mid-last week. With Seadrill in the midst of negotiations with its debtholders to restructure the company and its debt, its shares are almost always going to be more volatile on days when its peers are moving big, as many are today. 

Offshore oil rig at night.

Image source: Getty Images.

Second, the first big industry consolidation move was announced today, with ENSCO PLC (NYSE:ESV) agreeing to acquire Atwood Oceanics, Inc. (NYSE:ATW), in an all-stock deal. 

While there haven't been any rumors, it's possible some Seadrill shareholders have been holding out hope that the company would be acquired, saving investors from the outcome of getting wiped out by bankruptcy -- a likelihood that increases with each passing day at this point. 

Like Atwood, Seadrill possesses one of the newest and most advanced fleets in the industry. But unlike Atwood, Seadrill has one of the biggest debt loads in the industry, both on a per-vessel and total amount. 

Furthermore, Atwood is also a relatively small company, making it a much more likely target than the much bigger Seadrill. 

It was also reported over the weekend that Seadrill had dropped out of the running for a multi-year, multi-vessel drilling contract. That news also probably played some role in today's big sell-off. 

Now what

While it may be tempting to buy shares of Seadrill today after this big drop -- especially if you're willing to take on the risk -- it doesn't reduce your risk for permanent losses. At this stage, the writing is on the wall that Seadrill is headed for major reorganization that will wipe out most, if not all, of common shareholders' equity. 

If you're looking to take on some risk in the offshore industry after a sell-off, ENSCO may be a better place to look. Shares are down 5% following today's acquisition announcement, and frankly, its move to acquire Atwood Oceanics looks really smart.

It will probably take some time for the benefits to hit the bottom line, but a few years down the road, it should work out well for ENSCO shareholders, and for Atwood shareholders who take shares of ENSCO when the merger happens.  

Jason Hall owns shares of Atwood Oceanics, Ensco, and Seadrill. Jason Hall has the following options: long July 2017 $3 calls on Seadrill. The Motley Fool owns shares of and recommends Atwood Oceanics. The Motley Fool has a disclosure policy.