Aberdeen-headquartered KCA Deutag (KCAD) has struck a £480million deal to take over a rival drilling contractor’s Omani and Saudi businesses.
KCAD said the deal with Dalma Energy would strengthen its Middle East operations and herald its entry to the Saudi onshore drilling services market.
Dalma’s shareholders will receive £72million in cash and an equity shareholding of about 22% in the enlarged KCAD group, valued at £160million.
The deal is worth £480million, including £250million of debt.
Dalma’s Omani and Saudi business had revenues of £225million in 2017.
The transaction, which is expected to go through in the second quarter of 2018, will add 29 land rigs to KCAD’s portfolio, 20 in Oman and nine in Saudi Arabia.
KCAD will have a total of 83 land rigs globally on completion of the acquisition.
It currently owns and operates eight rigs in Oman.
The enlarged business will retain the KCA Deutag brand name and will have about 9,700 employees.
All staff deemed “critical to operations” will transfer to KCAD from Dalma, the buyer said.
Synergies between the two businesses should generate savings of more than £7.2million per year.
The deal also adds £800million to the expanded group’s backlog.
Furthermore, KCAD said the expansion would open up more opportunities for its drilling rig and oilfield equipment making division, Bentec, which has a manufacturing facility in Nizwa, Oman.
KCAD chief executive 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.”