Precision Drilling Corporation (TSX:PD) is set to acquire Calgary’s CWC Energy Services (TSX-V:CWC) in a significant deal valued at approximately $141 million.
The move expands Precision's service offerings in both the Canadian and oil markets, adding 62 marketed service rigs in Canada, seven marketed drilling rigs in Canada, and 11 marketed drilling rigs in the US, including seven AC triple rigs to its portfolio.
The acquisition includes 947,909 Precision shares valued at around $88 million, $14 million in cash, and the absorption of CWC's existing debt, according to a release from Precision.
In addition to the news rigs, Precision is expecting annual operating synergies of about $20 million after integration and the identification of approximately $20 million worth of excess CWC real estate for monetization post-closing. The firm is hoping to reduce its debt by $500 million by 2025.
Precision said it anticipates the acquisition will be accretive to earnings and generate substantial cash flow, supporting its debt reduction strategy.
The deal's implied blended offer price for CWC shares is approximately 19.7 cents per share, based on Precision's closing price on September 1, 2023. CWC shares closed at 20.5 cents on the TSX Venture Exchange.
The completion is expected in the fourth quarter of 2023.