Precision Drilling Completes Acquisition of CWC Energy Services Corp.

Rhea-AI Summary

Precision Drilling Corporation (TSX:PD; NYSE:PDS) has completed the acquisition of CWC Energy Services Corp. for approximately $127 million, including cash, shares, and assumption of debt. The integration is expected to generate $20 million in annual operating synergies and $20 million from real estate sales. Precision now has 72 active service rigs in Canada, 73 active drilling rigs in Canada, and 51 active drilling rigs in the U.S.

Positive

• The acquisition positions Precision as a premier well service provider in Canada and enhances its drilling operations in both Canada and the U.S.
• The projected synergies are expected to be accretive on a 2024 cash flow per share basis and support the company's ongoing deleveraging plan.

Negative

• None.

CALGARY, Alberta, Nov. 08, 2023 (GLOBE NEWSWIRE) -- This news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release.

Precision Drilling Corporation (“Precision” or the “Company”) (TSX:PD; NYSE:PDS) is pleased to announce that it has completed its acquisition of CWC Energy Services Corp. (“CWC”). The total consideration for CWC included 947,807 Precision common shares, approximately $14 million in cash, plus the assumption of CWC’s net debt of approximately $38 million, excluding transaction costs. The total transaction value for CWC was approximately $127 million on November 7, 2023.

With the acquisition completed, Precision will begin integrating the two companies, which includes delivering approximately $20 million in expected annual operating synergies and monetizing approximately $20 million from planned excess real estate sales. Including CWC’s rigs, Precision now has 72 active service rigs in Canada, 73 active drilling rigs in Canada and 51 active drilling rigs in the U.S.

Precision’s President and CEO, Kevin Neveu, stated, “We are pleased to have completed this strategic acquisition, which positions Precision as the premier well service provider in Canada and enhances our drilling operations in both Canada and the U.S. With the projected synergies, we expect the transaction to be accretive on a 2024 cash flow per share basis and to support our ongoing deleveraging plan. I am excited to welcome the CWC employees to the Precision team.”

Transaction Details

Precision has acquired all of the issued and outstanding shares of CWC, with each CWC shareholder receiving, at their election (a) 0.002124306 of a Precision share for each CWC share; (b) $0.196668 in cash for each CWC share; or (c) a combination of cash and Precision shares, subject to proration. For more information please refer to CWC’s Management Information Circular filed on SEDAR+ at www.sedarplus.ca.

About Precision

Precision is a leading provider of safe and environmentally responsible High Performance, High Value services to the energy industry, offering customers access to an extensive fleet of Super Series drilling rigs. Precision has commercialized an industry-leading digital technology portfolio known as Alpha™ that utilizes advanced automation software and analytics to generate efficient, predictable, and repeatable results for energy customers. Our drilling services are enhanced by our EverGreen™ suite of environmental solutions, which bolsters our commitment to reducing the environmental impact of our operations. Additionally, Precision offers well service rigs, camps and rental equipment all backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Precision is headquartered in Calgary, Alberta, Canada and is listed on the Toronto Stock Exchange under the trading symbol “PD” and on the New York Stock Exchange under the trading symbol “PDS”.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements contained in this report, including statements that contain words such as "could", "should", "can", "anticipate", "estimate", "intend", "plan", "expect", "believe", "will", "may", "continue", "project", "potential" and similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking information and statements").

In particular, forward-looking information and statements include, but are not limited to, the following:

• anticipated annual operating synergies;
• monetization of excess real estate;
• anticipated future activity levels;
• anticipated free cash flow; and
• our future debt reduction and shareholder capital return plans.
  

These forward-looking information and statements are based on certain assumptions and analysis made by Precision in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. These include, among other things:

• the fluctuation in oil prices may pressure customers into reducing or limiting their drilling budgets;
• the status of current negotiations with our customers and vendors;
• customer focus on safety performance;
• existing term contracts are neither renewed nor terminated prematurely;
• continued market demand for Super Spec rigs;
• our ability to deliver rigs to customers on a timely basis;
• the general stability of the economic and political environments in the jurisdictions where we operate; and
• the impact of an increase/decrease in capital spending.

Undue reliance should not be placed on forward-looking information and statements. Whether actual results, performance or achievements will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from our expectations. Such risks and uncertainties include, but are not limited to:

• the business, operational and/or financial performance or achievements of Precision or CWC may be materially different from that currently anticipated. In particular, the synergies and benefits anticipated in respect of the transaction are based on the current business, operational and financial position of each of Precision and CWC, which are subject to a number of risks and uncertainties;
• volatility in the price and demand for oil and natural gas;
• fluctuations in the level of oil and natural gas exploration and development activities;
• fluctuations in the demand for contract drilling, well servicing and ancillary oilfield services;
• our customers’ inability to obtain adequate credit or financing to support their drilling and production activity;
• changes in drilling and well servicing technology, which could reduce demand for certain rigs or put us at a competitive advantage;
• shortages, delays and interruptions in the delivery of equipment supplies and other key inputs;
• liquidity of the capital markets to fund customer drilling programs;
• availability of cash flow, debt and equity sources to fund our capital and operating requirements, as needed;
• the impact of weather and seasonal conditions on operations and facilities;
• competitive operating risks inherent in contract drilling, well servicing and ancillary oilfield services;
• ability to improve our rig technology to improve drilling efficiency;
• general economic, market or business conditions;
• the availability of qualified personnel and management;
• a decline in our safety performance which could result in lower demand for our services;
• changes in laws or regulations, including changes in environmental laws and regulations such as increased regulation of hydraulic fracturing or restrictions on the burning of fossil fuels and GHG emissions, which could have an adverse impact on the demand for oil and natural gas;
• terrorism, social, civil and political unrest in the foreign jurisdictions where we operate;
• fluctuations in foreign exchange, interest rates and tax rates; and
• other unforeseen conditions which could impact the use of services supplied by Precision and Precision’s ability to respond to such conditions.
  

Readers are cautioned that the forgoing list of risk factors is not exhaustive. Additional information on these and other factors that could affect our business, operations or financial results are included in reports on file with applicable securities regulatory authorities, including but not limited to Precision’s Annual Information Form for the year ended December 31, 2022, which may be accessed on Precision’s SEDAR profile at www.sedar.com or under Precision’s EDGAR profile at www.sec.gov. The forward-looking information and statements contained in this news release are made as of the date hereof and Precision undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

For further information, please contact:

Lavonne Zdunich, CPA, CA
Director, Investor Relations
403.716.4500
Precision Drilling Corporation
800, 525 - 8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Website: www.precisiondrilling.com

 

FAQ

What is the total transaction value for CWC?

The total transaction value for CWC was approximately $127 million on November 7, 2023.

How many active service rigs does Precision now have in Canada?

Precision now has 72 active service rigs in Canada.

What are the expected benefits of the integration?

The integration is expected to generate $20 million in annual operating synergies and $20 million from real estate sales.

What is the expected impact of the acquisition on Precision's cash flow?

The projected synergies are expected to be accretive on a 2024 cash flow per share basis and support the company's ongoing deleveraging plan.