KCA Deutag (KCAD), a leading global drilling and engineering contractor, announced that it has entered into an agreement with the shareholders of Dalma Energy to combine their respective businesses through the acquisition by KCAD of Dalma’s Omani and Saudi Arabian businesses (Dalma Business).
Consideration for the acquisition, based upon an enterprise valuation of $660mn, will consist of $100mn of cash and shares to be issued to Dalma’s shareholders valued at $220mn.
KCAD had revenue of over $1.16bn and EBITDA of $219-224mn in the year ending 31 December 2017. The Dalma Business had revenue of $312mn and EBITDA of $110mn in the year ending 31 December 2017.
Upon completion, the KCAD group as enlarged by the Dalma Business will continue to operate under the KCA Deutag brand name and will have approximately 9,700 employees.
While this move will consolidate KCAD’s position as the world’s premier international drilling and engineering contractor, the enlarged KCAD Group will own and operate a fleet of 83 land rigs globally. The agreement strengthens KCAD’s core Middle Eastern operations and provides KCAD entry to the substantial Saudi Arabian onshore drilling services market.
The enlarged KCAD Group will become the second largest international owner and operator of 46 land rigs in the Middle East, of which 28 are in Oman and 9 in Saudi Arabia. The areas for potential cost synergies have been identified and the enlarged KCAD Group will be working towards delivering these efficiency improvements.
The acquisition is expected to generate more than $10mn of run-rate cost savings synergies per annum for the enlarged KCAD Group. It will create an excellent platform to capture growth opportunities in the enlarged group’s major markets, and will provide enhanced opportunities for Bentec, the group’s drilling rig and oilfield equipment manufacturer. The acquisition will add $1.1bn of backlog with blue chip clients to an already healthy KCAD order book of $5.2bn (as on 1 February 2018).
Norrie McKay, CEO, KCAD, 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 markets, which have been a key target for KCAD.”