Atlantica Tender Drilling (Atlantica) and Energy Drilling have signed a letter of intent (LoI) to merge their operations.
Atlantica owns and operates semi‐submersible tender drilling rigs engaged in the Atlantic Ocean, while Energy Drilling owns and operates barge tender drilling rigs in Southeast Asia.
The transaction, if successful, will create a stronger combined entity in the drilling industry with a larger geographical presence. According to the two companies, the combined firm will be the second largest tender drilling contractor with a fleet of five rigs. In 2018, the combined operations generated $211m in revenues and earnings before interest, tax, depreciation and amortization (EBITDA) of $114m.
Atlantica CEO Kerry Kunz said: “This merger represents the starting point for an attractive growth strategy targeting to consolidate and expand in the drilling industry.
“Atlantica and Energy Drilling has the right assets, backlog and balance sheet to be a forward leaning M&A partner in the industry.”
Under the LoI, the two companies will form an implementation committee comprising members from both the entities to carry out detailed planning and structuring of the merger. The committee will also decide on the management structure of the combined company and its future operational presence.
Once the conditions of the LoI are met, the transaction is expected to be completed in early third quarter of 2019, subject to other closing conditions.
Energy Drilling CEO Marcus Chew said: “The two companies have performed drilling operations in multiple geographical locations for top clients such as Petrobras, Total and PTTEP.
“Our goal is to grow our combined company to provide our clients with cost effective, productive and safe drilling operations.”
The merger is already said to have received support from the majority of Atlantica and Energy Drilling shareholders.