Saipem Sells Onshore Drilling Ops for $550MM

Saipem S.p.A. has announced that it has signed a binding agreement with KCA Deutag to sell the entirety of its Drilling Onshore operations in exchange for a cash consideration of $550 million, plus a 10 percent stake in KCA after its acquisition of Saipem’s asset.

The transaction does not entail any financial debt transfer from Saipem to KCA and final consideration is subject to customary closing adjustments, Saipem outlined in a statement sent to Rigzone. Closing of the deal is expected to occur by October 31, 2022, for the activities in Middle East and by March 31, 2023, for the Americas, Saipem revealed.

The cash proceeds from the transaction will improve Saipem’s liquidity, lowering its net debt and supporting the delivery of its 2022-25 business plan, Saipem noted. The company described the transaction as a further step towards a more focused and resilient business model based on the growing trends of Saipem’s reference markets, concentrating efforts in Drilling Offshore while supporting the achievement of its capital structure and liquidity objectives.

In a statement posted on its website, KCA highlighted that the acquisition will create a leading global onshore drilling business with over $1.6 billion in revenue across core geographies in the Middle East and key markets in Europe and Latin America. The combined group will have more than 11,000 employees globally and its total backlog will increase to $7.2 billion, KCA outlined.

“This milestone acquisition of Saipem Onshore Drilling allows us to significantly upgrade our business by expanding in core geographies in the Middle East and key markets in Europe and Latin America,” Joseph Elkhoury, KCA Deutag’s CEO, said in a company statement. 

“We have continued to transform our business to #enhancethebrand and create accretive value for all our stakeholders: employees, customers, investors and the communities where we live and work,” he added in the statement.

“We look forward to delivering our outstanding safe and quality services to existing and new customers, and to welcoming our new colleagues to the Group,” Elkhoury continued.

​Back in March, KCA announced that it had secured contract extensions and options totaling over $170 million, “with the majority focused on extensions with existing clients across core markets in the Middle East”.

To contact the author, email andreas.exarheas@rigzone.com