Saipem has currently transferred its operations in Saudi Arabia, Congo, United Arab Emirates (UAE) and Morocco to KCAD, with plans to transfer its activities in the Americas, Kuwait, Kazakhstan, and Romania later
Italian oilfield services company Saipem has completed the initial phase of the previously announced sale of its onshore drilling business to UK-based oil and gas company KCA Deutag.
In June 2022, Saipem and KCA Deutag signed the agreement.
Under the terms of the agreement, Saipem will sell its onshore drilling operations in the Middle East, Africa, and the Americas to KCAD, for a total consideration of $550m.
Also, the company is entitled to obtain a 10% participation share in KCAD.
Currently, Saipem has transferred its operations in the Middle East and Africa to KCAD, in exchange for a cash consideration of $488m.
Its operations in Saudi Arabia, Congo, United Arab Emirates (UAE) and Morocco have been transferred.
The company also obtains a 10% participation share in KCAD and is entitled to appoint one member to the board of KCAD.
Saipem will receive the remaining consideration, upon transferring the activities in the Americas, Kuwait, Kazakhstan, and Romania, including five rigs and two active contracts.
The remaining activities are expected to be closed by 31 March 2023, subject to customary authorisations, including antitrust.
Saipem, in its statement, said: “This transaction for Saipem is a milestone towards a more focused and resilient business model based on the growing trends of Saipem’s reference markets, concentrating efforts in the offshore drilling business while supporting the achievement of its capital structure and liquidity objectives.”
KCA Deutag said that the acquisition will create a large global onshore drilling business with more than $1.7bn in revenue across key markets in the Middle East, Europe, and Latin America.
Also, it will further strengthen the company’s blue-chip customer base with enhanced exposure to National Oil Companies, and improve market participation.
KCA Deutag CEO Joseph Elkhoury said: “By completing the first and largest phase of the Saipem Onshore Drilling acquisition, we will significantly expand and upgrade our business in the Middle East, a core market for the Group.
“Together, we have a unique opportunity to build a leading international business, further #enhancethebrand and deliver accretive value to all our stakeholders: our employees, our customers, our investors and the communities where we live and work.
“Moving forward, and as we welcome our new Saipem colleagues to the Group, our main goal is to proactively collaborate to #becomeoneteam and safely deliver a seamless transition to all our customers.”