Helmerich & Payne, a leading US petroleum contract drilling company based in Oklahoma, has announced that it has reached an agreement with KCA Deutag International, a diverse global drilling company with rigs across the Middle East, Europe, Africa, Caspian Sea, Latin America and Canada, to acquire the firm for $1.9725 billion in cash.

 

KCA Deutag, which has its headquarters in Aberdeen, UK, boasts a significant land drilling presence in the Middle East, representing approximately two-thirds of the company’s calendar year 2023 operating ebitda, with additional operations in South America, Europe and Africa. 

 

In addition to its land operations, KCA Deutag has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada, with super major customers and long-term earnings visibility through a robust backlog. 

 

The UK-based group's Kenera segment comprises manufacturing and engineering businesses, including Bentec, with three facilities serving the energy industry, representing a longer-term growth opportunity.

 

On the takeover, H&P President and CEO John Lindsay said: "This is a historic and transformative transaction for the company, and we are excited about what this means for H&P’s future, as it accelerates our international expansion particularly in the Middle East and enhances the company’s global leadership in onshore drilling solutions."

 

"KCA Deutag’s assets and operations will add resilient revenues, providing greater earnings visibility and cash flow generation. As a result, we expect to generate sizeable incremental cash flows and are confident this transaction will deliver near- and long-term growth and value creation for H&P shareholders," he stated.

 

Lindsay said H&P has a history of having a thoughtful and managed approach to running and investing in the business and is well versed in the challenges brought about by crude oil and natural gas volatility. 

 

"Our experience in the industry combined with a Middle East market poised for continued growth should be indicative of the importance and the compelling reasons for executing on this acquisition at this time," he stated. 

 

According to him, the KCA Deutag buy gives H&P immediate scale in core Middle East markets in a way that would be challenging to replicate organically. 

 

"Furthermore, as there is very little geographic overlap, we view this transaction more than just acquiring assets, but rather acquiring operations with quality people," he stated.

 

KCA Deutag CEO Joseph Elkhoury said: "This announcement represents a significant milestone in our strategic transformation journey and delivers benefits to all stakeholders: our employees, customers, shareholders and the communities where we live and work."

 

"We look forward to joining H&P, combining the strengths of our people together with our geographical footprint, to create an organization with an unrivalled global network, service capability and technology offering," he stated. 

 

"The size, scale and financial strength of the combined organization will provide a stable foundation for long-term growth and diversification to safeguard a sustainable and prosperous future for our people," observed Elkhoury. 

 

"With similar customer-centric cultures, focused on safety and delivering incident-free, quality services and innovative technology, we will leverage H&Ps operational processes and practices to accelerate efficiencies and optimize operational excellence for our customers," he said. 

 

"Once completed, this transaction is expected to deliver multiple growth opportunities for our people and customers while facilitating value realization for our investors," he added.-TradeArabia News Service