Precision Drilling Corp. entered an asset purchase agreement to acquire High Arctic Services Inc.'s well servicing business and associated rentals assets, according to a Precision press release on July 18.
The transaction, subject to customary commercial closing conditions, sold for an aggregate purchase price of $38.2 million in cash, with an initial $10.2 million due at closing and the remaining balance due January 2023.
With the transaction expected to close before the end of this month, CIBC Capital Markets is serving as Precision's exclusive financial advisor, and Torys LLP is serving as Precision's legal advisor.
"With the expected synergies and further leveraging our scale, we believe this transaction provides accretive earnings and significant cash generation potential supporting our debt-reduction strategy and our short-term and long-term debt reduction targets of $75 million in 2022 and $400 million between 2022 and 2025," Precision president and CEO Kevin Neveu commented in the release.
The acquisition will add 80 service rigs – 51 marketed and 29 inactive – to Precision's well servicing operation in Canada for a combined marketing fleet of 134 service rigs, as well as rental assets, ancillary support equipment, inventories and spares and six additional operating facilities in key basins.
Additionally, Precision will receive High Arctic's high-quality assets, along with its experienced field personnel and customer following. Upon the implementation of the assets, Precision is expected to generate annual operating cost savings of $5 million annually.
"High Arctic’s people are well known for their focus on safety and field execution and will complement Precision’s high performance, high value operating strategy," Neveu continued. "The transaction accomplishes needed consolidation in the well servicing industry, providing greater opportunities for our combined team while bolstering service capabilities for our customers."
Calgary-based Precision is a service company focused on providing oil and gas customers with safe and environmentally friendly solutions, as well as access to its extensive fleet of Super Series drilling rigs.
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