Seadrill (NYSE:SDRL) +9.5% in Thursday's trading following Bloomberg's report late yesterday that it is in merger talks with larger offshore driller Transocean (RIG), a deal Citi analysts think has a reasonably high probability of occurring.

Stock futures of offshore drilling companies Transocean and Seadrill were rising on Thursday on reports that the sector rivals were considering a potential merger.

Offshore drilling provider Transocean is in talks to merge with rival Seadrill Ltd, Bloomberg News reported on Wednesday, citing people familiar with the matter. The companies are discussing the potential structure of the combination,

Transocean Ltd. is in talks to merge with rival offshore drilling contractor Seadrill Ltd., according to people familiar with the matter, just as oil explorers around the world are returning to the sea.

Shares of Seadrill rallied early Thursday after a report the offshore drilling company is in talks to merge with Transocean.

The two offshore oil drilling companies have discussed how to structure a potential merger, according to a report.

Seadrill (NYSE:SDRL) +10.2% post-market Wednesday following a Bloomberg report it is in ongoing discussions with larger offshore drilling contractor Transocean (NYSE:RIG) about a potential merger. Merging with Seadrill (SDRL) would fit Transocean's (RIG) strategy of growing its list of backlog work,