Precision Drilling has signed an agreement to acquire Trinidad Drilling in a transaction valued at C$1.03bn ($796m), including the assumption of nearly $367m debt.
Image: Precision Drilling to acquire Trinidad Drilling in $796m deal. Photo courtesy of Vlado/FreeDigitalPhotos.net.
Following the completion of the transaction, shareholders of Trinidad Drilling will collectively own about 29% stake in Precision.
Precision president and chief executive officer Kevin Neveu said: “This transaction creates exceptional value for both Trinidad and Precision shareholders.
“The combination provides a truly unique opportunity to combine two highly-focused drilling contractors that are pursuing similar growth initiatives and competitive strategies and importantly, operating similar Tier 1 assets.”
The acquisition will enable Precision to gain Trinidad’s fleet of 141 drilling rigs, including 61 high specification AC rigs.
Overall, Precision is expected to own a North American fleet that includes over 200 active rigs and 322 total rigs.
The transaction is expected to allow Precision to possess strong positions in all key shale plays and have an expanded platform for technology deployment.
Neveu said: “From a strategic perspective, Trinidad is a perfect fit with Precision. We can realize immediate synergies, estimated to be over $30 million, through fixed cost reductions, operational efficiencies and reduced public company costs.
“Over the long-term, the additional scale will further strengthen Precision’s operating leverage and positions the company to service our customers’ continued transition to High Performance drilling services with high spec AC rigs.”
The transaction is subject to TSX, court and regulatory approvals and the satisfaction of other customary closing conditions. It is anticipated to be completed in late 2018.
In August, Canadian oilfield services provider Ensign Energy Services (ESI) announced plans to acquire Trinidad Drilling in a deal valued at C$947m ($720.26m) including debt. Ensign currently owns a 9.8% stake in Trinidad Drilling.
Trinidad said that it believes the transaction with Precision is superior to the offer made by Ensign on 30 August 2018. It has recommended its shareholders to reject the unsolicited offer made by Ensign.
The firm said in a statement: “In addition to a higher premium than the Ensign Offer, the equity component of this Transaction allows Trinidad’s shareholders to benefit from the upside generated by the combination of two high quality contract drillers, such as Trinidad and Precision.”