Italian oilfield services company Saipem has agreed to divest its entire drilling onshore operations to UK-based KCA Deutag for a total consideration of $550m in cash.

In addition to the consideration, the company would also receive a 10% stake in KCA Deutag.

Saipem’s drilling onshore business operates in 13 countries worldwide, focusing on the Middle East and Americas, and has nearly 4,000 people working at its portfolio of 83 rigs.

The business reported net revenues of €347m euro and an adjusted EBITDA of €82m for the full year 2021.

Saipem intends to use the cash proceeds from the transaction to improve its liquidity, reduce its net debt and support its 2022-25 business plan.

The transaction does include any financial debt transfer from Saipem to KCA Deutag.

KCA Deutag is a drilling, engineering and technology company that operates around 110 drilling rigs in 20 countries, with a workforce of 8,300 people.

With the addition of Saipem’s drilling onshore business, KCA Deutag is expected to benefit from additional opportunities and operational synergies.

For Saipem, the transaction forms a further step towards a focusing its efforts in the Drilling Offshore while supporting reaching its capital structure and liquidity goals.

The transaction is expected to be completed in October this year for the activities in Middle East  and by March 2023 for Americas.

The closing is subject to separation of the drilling onshore business from Saipem Group and Saipem’s capital raise and certain customary conditions and approvals

JP Morgan and Lazard served as advisor to Saipem on this transaction.

In June last year, Saipem has signed an agreement with Naval Energies, a subsidiary of Naval Group, to acquire the latter’s floating wind business.

The acquisition includes Naval Group’s engineering know-how on floating units, intellectual property rights, along with nearly thirty experts in modelling and simulation.