Allis-Chalmers Energy Inc., Bridas International Holdings Limited, Bridas Central Company
Limited, and Associated Petroleum Investors Limited (Bridas Group) have executed a stock purchase agreement for Allis-Chalmers to
acquire all of the outstanding capital stock of DLS Drilling Logistics and
Services Corp. (DLS) from the Bridas Group.
DLS is a Latin American drilling, workover, pulling
and other oil and gas field services business. Upon
the closing of this transaction, the Bridas group of companies expect to
make significant contributions to Allis-Chalmers Energy Inc. and will have
the right to nominate two members to its board of directors.
The purchase agreement provides that the consideration for the DLS
stock will consist of cash in the amount of US $102.4 million and 2.5
million shares of Allis-Chalmers' common stock. Allis-Chalmers' obligations
under the agreement are subject to obtaining equity and debt financing
necessary to complete the acquisition.
DLS, a privately held British Virgin Island (BVI) company headquartered
in Buenos Aires, is a major provider of services for drilling,
workover/completion and repair of oil and gas wells in Argentina and
Bolivia. With more than 1,500 employees, DLS operates a fleet of 51
rigs, including 21 drilling rigs, 18 workover rigs, and 12 pulling rigs in
all major basins in Argentina and Bolivia. DLS also offers other oilfield
services such as drilling and completion fluids. Currently the largest
customer of DLS is PanAmerican Energy, an exploration & production company
that is owned by both BP and the Bridas Group.
For the fiscal year ending December 31, 2005, DLS had revenues of US
$130.0 million, net income of US $6.6 million, and earnings before interest, taxes, dividends, and amortization (EBITDA) of US $22.7
million. Based on unaudited, internal financial statements, DLS's results
for the twelve months ended March 31, 2006, included revenues of US $139.2
million, net income of US$10 million and EBITDA of US$25.7 million. For
the first quarter ended March 31, 2006, DLS' revenues were US$38.8 million,
net income was US$4 million, and EBITDA was US$7.7 million. As of March
31, 2006, DLS had net working capital of US$11.2 million. The fair market
value of the fixed assets based on a third-party appraisal is estimated to
be approximately US$180 million, which compares favorably to the net book
value at March 31, 2006, of US$109.3 million. The financial statements as
of March 31, 2006 have not been audited and are the internal financial
statements of DLS.
"We are extremely excited at the prospect of DLS being our platform
entry into international drilling, workover, and production operations," said Micki Hidayatallah, Allis-Chalmers' chairman and CEO. "We
believe that the ability to offer drilling rigs is very important in the
international marketplace and is the lead in to provide the other services
we offer. We expect this transaction to further diversify our business mix
by balancing our predominately natural gas based operations in the United
States with primarily oil based drilling operations in Argentina."
Alejandro Bulgheroni, deputy chairman of Bridas Corp., added,
"We believe this strategic alliance with Allis-Chalmers, once consummated,
will enable the newly combined operations to benefit from DLS and the
Bridas Group's long standing oil and gas activities in Latin America,
Central Asia, Russia, and the Middle East."