Nabors Industries Ltd. agreed to divest its Canadian drilling assets to Ensign Energy Services Inc., according to a release by Ensign on June 24, which analysts say will bolster Nabors’ liquidity. 

Based in Houston, Nabors owns and operates one of the world’s largest land-based drilling rig fleets and is a provider of offshore rigs in the U.S. and numerous international markets. The company’s fleet in Canada comprises of 35 land-based drilling rigs plus related equipment and certain real property.

Despite not disclosing the transaction value, Ensign did note in the release it will fund the purchase price with cash on hand and available credit facilities, which analysts with Tudor, Pickering, Holt & Co. (TPH) said could result in cash proceeds to Nabors of between $55 million and $75 million.

“While that assumed transaction value range won’t induce turning of cartwheels, fact remains that the Canadian land rig biz isn’t really core to NBR’s global drilling operations and it’s not one that NBR has been investing heavily into in recent years,” TPH analysts wrote in a June 25 research note.

“Liquidity enhancement is what matters most to us via this transaction as NBR will be getting a decent chunk of change in the door in a market where the list of potential cash buyers for these assets is likely very slim,” the analysts continued. “As such, we do like seeing NBR get this deal done.”

The acquisition of Nabor Canadian land drilling business includes 12 AC-drive rigs, according to the TPH note, which Ensign CEO Robert Geddes said provides Ensign an expanded fleet of high-spec drilling rigs.

“This technical alignment, right at the drilling rig level,” Geddes said in the release, “will help Ensign to accelerate the adaptation of more sophisticated drilling control systems that continue to drive innovation, creating value to our clients, all while reducing net emissions.”

As part of the transaction, Nabors’ employees will also become part of the Ensign team, he added in the release.

Onshore