CanElson Acquires Canadian Drilling Company For $41.5 Million

Acquired the private Canadian drilling company that operates in the Montney liquids rich natural gas resource play of NE B.C.

CanElson Drilling Inc. (TO: CDI) announced Dec. 6 that it acquired Highkelly Drilling Ltd., a private Canadian drilling company that operates in the Montney liquids rich natural gas resource play of northeast British Columbia, for $41.5 million.

The consideration paid for all of the issued and outstanding shares of Highkelly was $34.5 million, consisting of $17.8 million in cash and the issuance of 2.6 million CanElson shares at a deemed price of $6.37 per share. As part of the transaction, CanElson has assumed net debt of $6.9 million, for a total purchase price of $41.5 million, including positive working capital of $0.5 million.

CanElson has also agreed to construct a third new AC electric triple rig to be completed and delivered in 3Q 2014. Separately, CanElson has renewed its syndicated credit facilities with extended terms and the potential for increased borrowing.

"This strategic acquisition accelerates CanElson's entry into the triple rig market and provides us with new state of the art efficient rigs, high quality experienced personnel and an immediate foothold with an active LNG customer in one of the most prolific liquids rich natural gas drilling regions in North America," Randy Hawkings, CanElson president and CEO, said in the release. "Not only is the transaction accretive, but with our renewed credit facility, our recently completed equity financings and our strong balance sheet we remain well positioned for further growth opportunities with other LNG players and in plays requiring deeper rigs."

CanElson Drilling Inc. is a provider of oilfield services engaged in the manufacture and operation of drilling rigs in Canada's Western Sedimentary Basin, the Permian Basin, North Dakota, and the Ebano-Panuco-Cacalilao field in Mexico. The company is based in Calgary.