KCA DEUTAG COMPLETES FIRST PHASE OF SAIPEM ONSHORE DRILLING ACQUISITION

As part of continuing to deliver its growth strategy and expanding in core markets such as the Middle East region, KCA Deutag has announced the completion of the largest phase of the Saipem SpA’s onshore drilling business acquisition.

This first phase encompasses Saudi Arabia, UAE and Africa, with Kuwait expected to follow later in Q4 2022. The acquisition of the Latin America business together with the rigs in Romania and Kazakhstan will complete in 2023.

The total consideration payable for Saipem Onshore Drilling is $550 million in cash and a 10% equity interest in the Group, with $85 million of cash consideration to be withheld pending completion of the remaining closings. In addition, Saipem SpA will be entitled to appoint one board member.

KCA Deutag had revenue of $1.3 billion and EBITDA of $254m in the 12 months ending 30 June 2022. During the same period, Saipem Onshore Drilling generated revenue of $490 million and EBITDA of $124 million from its Middle East, Latin America and other markets.

Once the acquisition is fully completed the combined Group will manage a leading global onshore drilling business generating over 50% of its EBITDA from the Middle East with more than 11,000 employees globally. Total backlog will increase by $1.8 billion to $6.7 billion.

Strategic highlights of the combined Group:

• The acquisition creates a leading global onshore drilling business with over $1.7 billion in revenue across core geographies in the Middle East and key markets in Europe and Latin America.
• $6.7 billion backlog will provide greater revenue visibility across global markets.
• Strengthens further the Group’s blue chip customer base with increased exposure to leading National Oil Companies.
• Improved market participation across geographies with some of the lowest oil lifting costs in the world.
• Confidence in generating around $24 million in cost synergies from overhead and operational efficiencies.

Joseph Elkhoury KCA Deutag CEO said: “Today marks a major and exciting milestone for KCA Deutag. By completing the first and largest phase of the Saipem Onshore Drilling acquisition, we will significantly expand and upgrade our business in the Middle East, a core market for the Group.”

“Together, we have a unique opportunity to build a leading international business, further #enhancethebrand and deliver accretive value to all our stakeholders: our employees, our customers, our investors and the communities where we live and work.”

“Moving forward, and as we welcome our new Saipem colleagues to the Group, our main goal is to proactively collaborate to #becomeoneteam and safely deliver a seamless transition to all our customers.”

“By the time the full acquisition is complete, we will own and operate more than 80 additional

rigs with around 11,000 colleagues across core geographies in the Middle East and key markets in Europe and Latin America. This acquisition will additionally stimulate growth opportunities for Kenera with oilfield services, innovative technology and exciting energy transition solutions.”

“I want to thank our shareholders and both company Boards for their support and extend my genuine gratitude to all those involved in delivering this transaction. I also appreciate the unrelenting resilience of our teams despite the recent adversity and disruption.”

Barclays and Houlihan Lokey have acted as financial and debt advisors respectively, to KCA Deutag on the transaction.