US oil and gas drilling company Helmerich & Payne (H&P) has signed a definitive agreement to acquire KCA Deutag in an all-cash deal valued at $1.97bn.
As a drilling company KCA Deutag has land drilling presence in the Middle East, which accounted for approximately two-thirds of its operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) in 2023.
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It also manages operations in South America, Europe and Africa.
The acquisition includes KCA Deutag’s asset-light offshore management contract operations in strategic locations, with a strong client base and a backlog ensuring long-term earnings visibility, H&P noted.
Additionally, the Kenera segment, encompassing manufacturing and engineering businesses like Bentec, are expected to present further growth opportunities for H&P.
With this acquisition, H&P aims to achieve a balanced geographic and operational presence across the US and international markets, enhancing its earnings and cash flow streams.
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By GlobalDataThe transaction also adds 29 offshore platform rigs under management and three manufacturing and engineering facilities to H&P’s assets.
H&P has identified the Middle East as a growth market for rig operations and expects to bolster its revenue and cash flow through KCA Deutag’s $5.5bn (£4.28bn) contract backlog.
The deal boosts H&P’s Middle East rig count from 12 to 88, positioning the company among the largest rig providers in the region.
H&P anticipates realising around $25m in synergies by 2026, primarily through overhead and procurement savings, despite the limited geographic overlap between the two companies.
H&P president and CEO John Lindsay said: “This is a historic and transformative transaction for the company, and we are excited about what this means for H&P’s future, as it accelerates our international expansion, particularly in the Middle East, and enhances the company’s global leadership in onshore drilling solutions.”
KCA Deutag CEO Joseph Elkhoury said: “This announcement represents a significant milestone in the strategic transformation journey of KCA Deutag and delivers benefits to all stakeholders: our employees, customers, shareholders and the communities where we live and work.
“We look forward to joining H&P, combining the strengths of our people together with our geographical footprint, to create an organisation with an unrivalled global network, service capability and technology offering.”
After the transaction closes, the company will reorganise into three main operating segments: North America Solutions, International Solutions and Offshore Solutions.
The transaction is due to be completed by the end of 2024, pending regulatory approvals and standard closing conditions.
