Helmerich & Payne’s $2bn acquisition of KCA Deutag set to reshape global drilling industry

In a landmark transaction, American drilling contractor Helmerich & Payne (H&P) has announced its agreement to acquire KCA Deutag International, a major player in onshore and offshore drilling, engineering, and technology, in an all-cash deal valued at $1.97 billion. The acquisition represents a significant strategic move for Helmerich & Payne, aiming to bolster its global presence and capabilities.

Helmerich & Payne Expands Global Footprint with KCA Deutag Acquisition

Headquartered in Aberdeen, Scotland, KCA Deutag operates across 26 countries with a workforce exceeding 11,000 employees. The company manages a fleet of 167 drilling rigs spread over regions including the Middle East, the Caspian Sea, Europe, Africa, Canada, and Latin America. KCA Deutag is renowned for its advanced automation, directional drilling, survey management technologies, and its focus on decarbonisation through its Kenera business.

Joseph Elkhoury, CEO of KCA Deutag, highlighted the significance of the acquisition as a pivotal moment in the company’s strategic evolution. He noted that the merger would benefit all stakeholders, including employees, customers, shareholders, and the communities in which they operate. Elkhoury expressed enthusiasm about joining forces with Helmerich & Payne, anticipating that the combined strengths and geographical reach would forge a formidable global network and enhance service capabilities.

Helmerich & Payne’s Strategic Growth and Market Expansion

Helmerich & Payne, listed on the New York Stock Exchange (NYSE), is known for designing, fabricating, and operating high-performance drilling rigs globally. The acquisition of KCA Deutag is expected to significantly enhance Helmerich & Payne’s presence in key oil and gas regions, particularly the US and the Middle East. This strategic expansion aligns with the company’s goal of accelerating international growth, especially in the Middle East, where KCA Deutag generated approximately 70% of its EBITDA in 2023.

John Lindsay, President and CEO of Helmerich & Payne, described the transaction as a historic and transformative event for the company. Lindsay emphasised that the acquisition would not only accelerate international expansion but also strengthen Helmerich & Payne’s global leadership in onshore drilling solutions. He anticipated that the deal would provide resilient revenues, improved earnings visibility, and enhanced cash flow generation, ultimately delivering significant value for shareholders.

Integration and Future Prospects

The integration of KCA Deutag’s asset-light offshore services business and Kenera’s manufacturing and engineering operations is expected to fortify Helmerich & Payne’s capabilities in Europe and the Middle East. The acquisition includes 29 offshore platform rigs managed by KCA Deutag and three Kenera facilities serving the oilfield service industry.

The deal is projected to close before the end of 2024, subject to customary closing conditions and regulatory approvals. Recently, KCA Deutag finalised its acquisition of Saipem Onshore Drilling, further strengthening its global drilling capabilities by integrating rigs in Argentina, Kazakhstan, and Romania.