Precision Drilling to Pay $1B for Trinidad Drilling
Calgary-based Precision Drilling Corporation has entered into an agreement to acquire fellow Calgary-based Trinidad Drilling Limited for about $1 billion, which includes $540 million in Precision shares and $477 million of Trinidad debt.
Upon completion of the acquisition, which was announced Oct. 5, existing Trinidad shareholders will collectively own about 29 percent of Precision.
“This combination of two high-quality drilling contractors creates the third largest drilling contractor in the robust U.S. market and provides a significant international growth platform,” Brent Conway, Trinidad CEO, said in a company statement.
Precision will have a North American fleet that includes 322 rigs, including more than 200 active rigs. Precision will also have strong positions in all key shale plays, positioning them for improved industry activity.
The transaction “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,” Precision CEO Kevin Neveu said in a company statement.
He added, “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.”
Trinidad’s fleet of 141 drilling rigs includes 61 high spec AC rigs that fit 90 percent within Precision’s standardization protocols and are equipped with major components that are well aligned for fleet integration.
The transaction is expected to be completed in late 2018.
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