Helmerich & Payne, Inc. (H&P) is buying drilling and engineering agency KCA Deutag Worldwide for $1.972 billion in money.
The transaction is predicted to shut earlier than the tip of the yr, topic to customary closing situations and regulatory approvals, H&P stated in a information launch.
The transaction might be funded with money readily available and new borrowings. Given its projected money move era and elevated visibility with long-term contracts, H&P stated it’ll “be well-positioned to rapidly cut back debt using pre-payable time period loans, newly issued bonds with staggered maturities and powerful money flows”.
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KCA Deutag has a big land drilling presence within the Center East with extra operations in South America, Europe, and Africa. Along with its land operations, KCA Deutag has asset-light offshore administration contract operations within the North Sea, Angola, Azerbaijan and Canada, with tremendous main prospects and long-term earnings visibility by a sturdy backlog. KCA Deutag’s Kenera section includes manufacturing and engineering companies, together with Bentec, with three services serving the power business, representing a longer-term development alternative, in response to the discharge.
With KCA Deutag, H&P stated it’ll have a “sturdy geographic and operational combine throughout the U.S. and worldwide crude oil and pure fuel markets and diversified geographical publicity in earnings and money move streams”.
The transaction provides to H&P a complementary asset-light offshore administration contract enterprise, primarily comprising 29 offshore platform rigs below administration, and a producing and engineering enterprise.
H&P President and CEO John Lindsay stated, “It is a historic and transformative transaction for the Firm, and we’re enthusiastic about what this implies for H&P’s future, because it accelerates our worldwide enlargement notably within the Center East and enhances the corporate’s international management in onshore drilling options. KCA Deutag’s belongings and operations will add resilient revenues, offering higher earnings visibility and money move era. Because of this, we count on to generate sizeable incremental money flows and are assured this transaction will ship near- and long-term development and worth creation for H&P shareholders”.
“Buying KCA Deutag offers H&P rapid scale in core Center East markets in a means that might be difficult to duplicate organically. Moreover, as there may be little or no geographic overlap, we view this transaction extra than simply buying belongings, however quite buying operations with high quality folks,” he added.
KCA Deutag CEO Joseph Elkhoury stated, “This announcement represents a big milestone within the strategic transformation journey of KCA Deutag and delivers advantages to all stakeholders: our staff, prospects, shareholders and the communities the place we dwell and work. We look ahead to becoming a member of H&P, combining the strengths of our folks along with our geographical footprint, to create a company with an unrivalled international community, service functionality and expertise providing”.
“The scale, scale and monetary power of the mixed group will present a steady basis for long-term development and diversification to safeguard a sustainable and affluent future for our folks. With comparable customer-centric cultures, targeted on security and delivering incident-free, high quality providers and modern expertise, we’ll leverage H&Ps operational processes and practices to speed up efficiencies and optimize operational excellence for our prospects. As soon as accomplished, this transaction is predicted to ship a number of development alternatives for our folks and prospects whereas facilitating worth realization for our traders,” Elkhoury continued.
Following the completion of the transaction, H&P will stay headquartered in Tulsa, Oklahoma, and John Lindsay will proceed to function President and CEO, in addition to a board member. There might be no adjustments to the present H&P board.
H&P expects to have three major working segments: North America Options, Worldwide Options, and Offshore Options. H&P’s North America Options section will stay unchanged.
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