On Friday, Precision Drilling announced it has entered into a deal to purchase Trinidad Drilling. The sale is valued at just over $1 billion and includes $477 million in net debt. Company photo.
Precision Drilling CEO: Deal “creates exceptional value for both Trinidad and Precision shareholders”
Calgary-based Precision Drilling Corporation announced on Friday that it has entered into a $1.03 billion deal to purchase Trinidad Drilling Limited.
The agreement trumps a hostile bid takeover attempt by Ensign Energy Services after a $1.68 per share all cash bid was rejected by Trinidad’s board in August.
Precision offered stockholders an all-stock deal valued at $1.98 per share based on the bidder’s closing price on Thursday.
According to Trindad, Precision’s offer is much better than Ensign’s, adding that shareholders rejected the unsolicited offer made this past summer. Trinidad’s board unanimously approved the offer from Precision.
Kevin Neveu, President and Chief Executive Officer of Precision said, “This transaction creates exceptional value for both Trinidad and Precision shareholders.”
He added “the combination 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”.
Neveu says that through fixed cost reductions, operational efficiencies and reduced public company costs, the merger will realize immediate synergies valued at over $30 million.
“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.”
According to Precision, the combined company will have an enterprise value of about $4 billion and will operate under the Precision name.
The deal will make Precision the third-largest driller in the United States and Precision says it will have a strong position in US shale plays. The company will have a rig fleet of over 200 active rigs and 322 total rigs.
The sale is expected to close late in 2018 and is subject to TSX, court and regulatory approvals and the satisfaction of other customary closing conditions.