Aberdeenshire drilling services firm KCA Deutag is set to be acquired by American competitor Helmerich & Payne (H&P) in a deal worth nearly £1.5 billion ($2bn).
H&P said the deal will see them gain “leading positions” in the US and Middle East and become a “global leader in onshore drilling”.
KCA Deutag, headquartered in Porthlethen, has a significant land drilling presence in the Middle East alongside operations in Europe, South America and Africa.
It also maintains “asset-light” offshore management contracts in the North Sea, Angola, Azerbaijan and Canada.
‘Historic and transformative’ acquisition
H&P said the acquisition will increase its rig count in the Middle East from 12 to 88 rigs with president and chief executive John Lindsey calling it “historic and transformative” for the company.
He said: “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’s assets and operations will add resilient revenues, providing greater earnings visibility and cash flow generation.
“As a result, we expect to generate sizeable incremental cash flows and are confident this transaction will deliver near- and long-term growth and value creation for H&P shareholders.”
Acquiring KCA Deutag gives H&P “immediate scale” in core Middle East markets “in a way that would be challenging to replicate organically”, Mr Lindsay said.
“Furthermore, as there is very little geographic overlap, we view this transaction more than just acquiring assets, but rather acquiring operations with quality people,” he added.
KCA Deutag ‘significant milestone’
According to its website, KCA Deutag employs close to 11,000 people globally across 26 countries.
KCA Deutag chief executive, 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 deal is finalised, H&P will remain headquartered in Tulsa, Oklahoma.
The new H&P will have three segments including ‘North America’, ‘International’ and ‘Offshore’ divisions.
KCA Deutag history
KCA Deutag was founded in 1992, as Abbot Group by former executive chairman and Moray-based sheep farmer Alasdair Locke, one of the wealthiest people in Scotland.
Abbot was floated on the stock market in 1995 and in 2001 it bought one of the biggest names in North Sea drilling, Deutag, for £134m.
Group activities are all under three business units – land, offshore and Kenera.
With a strong focus on the energy transition, Kenera brings together KCA Deutag’s RDS design and engineering specialists and Germany-based land rig and oilfield manufacturer Bentec under one business unit.