CWC Energy Services to Combine with Precision Drilling in $103.4 Million Deal

CWC Energy Services, a prominent contract drilling and well servicing company in Canada and the U.S., has announced its agreement to merge with Precision Drilling, a leading Canadian drilling rig contractor. The deal is valued at approximately 141 million Canadian dollars ($103.4 million).

Under the definitive agreement, CWC Energy Services will receive a total consideration of 947,909 shares of Precision, along with C$14 million in cash. With Precision’s closing price on September 1st at C$92.58, the implied blended offer price amounts to around C$0.197 per share of CWC.

As part of this transaction, Precision will gain access to significant assets, including 62 marketed service rigs in Canada, seven marketed drilling rigs in Canada, and 11 marketed drilling rigs in the U.S. Notably, three Canadian drilling rigs and seven U.S. drilling rigs are currently engaged in active operations for customers.

Kevin Neveu, CEO of Precision Drilling, expressed excitement about the acquisition, highlighting the enhanced service offerings in both Canada and the U.S. due to the addition of high-quality rigs and field personnel. Neveu further emphasized the expected benefits from synergies resulting from the combination and emphasized Precision’s commitment to reducing debt through increased cash flow and earnings.

Precision Drilling aims to reduce its debt levels by C$500 million between 2022 and 2025, working towards achieving a sustained net debt-to-adjusted earnings before interest, taxes, depreciation, and amortization ratio of less than one times by the end of 2025. Progress has been made as Precision remains on track to reduce its debt by C$150 million by 2023.