Allis-Chalmers announced the execution of a share purchase agreement to acquire all of BrazAlta Resources Corp’s remaining equity interest in BCH Ltd. for $5 million. The closing of the transaction is anticipated by December 31, 2008 and will result in Allis-Chalmers owning all of the outstanding capital stock of BCH.
BCH is a Canadian oilfield services company engaged in contract drilling operations exclusively in Brazil. BCH operates seven drilling rigs and one workover rig, and is currently one of the largest inland drilling contractors in Brazil. All of BCH’s fleet of drilling rigs are currently under term contracts with Petroleo Brasileiro S.A. (Petrobras).
In addition to these rigs, Allis-Chalmers’ subsidiary in Argentina, DLS Drilling, Logistics and Services Corporation, is currently fabricating and upgrading a 3000 hp rig, which it anticipates will be marketed in Brazil through BCH.
Micki Hidayatallah, Allis-Chalmers’ Chairman and CEO stated, “The acquisition of BCH is part of our strategic goal to diversify our revenues and cash flow with term drilling contracts in the international market. We anticipate, based on current contracts, that BCH will generate stable cash flow with high rig utilization. Allis-Chalmers firmly believes in the potential of the Brazilian oil and gas market and hopes to further strengthen BCH’s long-term relationship with Brazil’s largest E&P operator, Petrobras, through the offering of a larger platform of related products and services, including rental equipment, directional drilling services, casing and tubing handling, mud services, and specialty chemicals and drilling fluids.”
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