UK-based drilling and engineering contractor KCA Deutag (KCAD) has signed a $660m merger agreement with Dalma Energy to support its presence in the Middle Eastern markets.
Under the deal, KCAD will acquire Dalma’s Omani and Saudi Arabian businesses, which will operate under the KCA Deutag brand.
KCAD CEO Norrie McKay said: “The acquisition of Dalma’s operations in Saudi Arabia and Oman will significantly strengthen our foothold in the Middle East, and provide us with a stronger platform to develop and grow our business in what is an exceptionally attractive region.
“Dalma’s operations are an excellent strategic fit, not only consolidating our position in Oman as the country’s leading owner and operator of onshore drilling rigs but also enabling us to offer our operational expertise in the substantial Saudi Arabian onshore drilling market, which has been a key target for KCAD.”
Under the deal, KCAD will offer $100m in cash and an equity shareholding of around 22% in the combined entity.
Through the merger, the company expects to achieve more than $10m of run-rate cost savings synergies per year and is set to enhance its fleet to 83 land rigs worldwide.
The enhanced fleet contains a total of 29 new rigs, including twenty in Oman and nine in Saudi Arabia.
Subject to certain conditions, the acquisition is expected to be completed in Q2 2018.
For the year ending 31 December last year, KCAD had a revenue of more than $1.16bn.
