Canada's Precision Drilling Corp. (NYSE: PDS) said Oct. 5 it would buy smaller rival Trinidad Drilling Ltd. in a deal valued at C$1.03 billion (US$796 million), trumping a hostile bid from Ensign Energy Services Inc.
Trinidad's board in August rejected a C$1.68 per share all-cash bid from oilfield services provider Ensign. That compared to Precision's all-stock offer for Trinidad of C$1.98 per share based on the bidder's closing price on Oct. 4.
Trinidad, which ended a strategic review in August by making changes to its board but stopping short of a sale, said Oct. 5 that Precision's offer is superior to Ensign's and reiterated that shareholders reject the unsolicited offer.
Ensign could not immediately be reached for comment.
A recovery in the Canadian oil industry has lagged a global rebound, with pipeline bottlenecks leading to a bigger-than-usual price discount for Western Canada Select heavy crude compared with U.S. crude prices
Those differentials have left Canadian oil-producing companies trailing their U.S. peers and kept them cautious about spending. Trinidad has lost money for three consecutive years and posted losses through the first two quarters of 2018.
Precision, which expects to save C$30 million through the deal, said the combined entity will have an enterprise value of about C$4 billion and operate under the Precision name.
The merger will position Precision as the third-largest driller in the U.S. with a rig fleet that includes over 200 active rigs and 322 total rigs, the companies said.
Precision offered 0.445 of its common shares for each outstanding Trinidad share, valuing it at C$1.98 per share and a premium of 7.6% to Trinidad stock's closing on Oct. 4.
Excluding debt, the deal is valued at C$551 million and is expected to close in late-2018.
RBC Capital Markets is acting as financial adviser to Precision and Torys LLP is Precision's legal adviser. TD Securities Inc. is acting as financial adviser to Trinidad and Blake, Cassels & Graydon LLP is Trinidad's legal adviser. (US$1 = C$1.2930)
Recommended Reading
Solar Panel Tariff, AD/CVD Speculation No Concern for NextEra
2024-04-24 - NextEra Energy CEO John Ketchum addressed speculation regarding solar panel tariffs and antidumping and countervailing duties on its latest earnings call.
NextEra Energy Dials Up Solar as Power Demand Grows
2024-04-23 - NextEra’s renewable energy arm added about 2,765 megawatts to its backlog in first-quarter 2024, marking its second-best quarter for renewables — and the best for solar and storage origination.
BCCK, Vision RNG Enter Clean Energy Partnership
2024-04-23 - BCCK will deliver two of its NiTech Single Tower Nitrogen Rejection Units (NRU) and amine systems to Vision RNG’s landfill gas processing sites in Seneca and Perry counties, Ohio.
Clean Energy Begins Operations at South Dakota RNG Facility
2024-04-23 - Clean Energy Fuels’ $26 million South Dakota RNG facility will supply fuel to commercial users such as UPS and Amazon.
Romito: Net Zero’s Costly Consequences, and Industry’s ‘Silver Bullet’
2024-04-22 - Decarbonization is generally considered a reasonable goal when presented within the context of a trend, as opposed to a regulatory absolute.