By Liz Hampton
Sept 5 (Reuters) - Offshore driller Transocean Ltd expects rates to lease drilling rigs to improve and contracting activity to pick up in late 2019, an outlook that drove its recent decision to purchase rival Ocean Rig UDW Inc for $2.7 billion, Chief Executive Officer Jeremy Thigpen said on Wednesday.
Transocean on Tuesday agreed to buy Ocean Rig, marking its second major acquisition this year. Earlier this year, it also closed on a $1.1 billion acquisition of Norwegian rig firm Songa Offshore.
The acquisitions signal an improved outlook for the offshore drilling sector which has been slow to recover from the 2014 oil price crash. Offshore fields typically require higher oil prices because they are more costly to develop.
"We are far more bullish than we have been historically," Thigpen said at a Barclay's conference in New York. The improved outlook for day rates and contracting activity underpinned the decision to acquire Ocean Rig, he said.
Transocean's stock fell more than 6 percent this week after it announced plans to buy Ocean Rig.
The company expects the market for offshore drilling vessels to move back into balance in the coming years, as some 60 units are going to come off contracts and retire, Thigpen said.
He estimated actual marketable supply of offshore drilling vessels is around 184, and will increase to about 218 in the coming years. (Reporting by Liz Hampton, Editing by Franklin Paul and Marguerita Choy)