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Saipem has completed the first phase of a transaction involving the sale of its onshore drilling business to UK-based drilling company KCA Deutag (KCAD).

KCAD has now purchased Saipem’s onshore drilling business in the Congo, Saudi Arabia, the UAE, and Morocco.

The UK-based firm is due to acquire Saipem’s onshore drilling business in Kuwait in the fourth quarter of 2022, followed by the Latin America business, along with the rigs in Romania and Kazakhstan in 2023.

In a deal signed earlier this year, Saipem agreed to sell all of its stakes in onshore drilling operations, including in the Middle East, Africa, and the Americas, to KCAD for a total consideration of $550m.

Saipem would also receive a 10% stake in KCAD that operates nearly 110 rigs in 20 countries.

Employing approximately 4,000 people, Saipem’s Drilling Onshore business has operations in 13 countries, with a focus on the Middle East and the Americas. It has a portfolio of 83 land rigs.

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By GlobalData

Saipem said in a statement: “The remainder of the consideration will be collected upon transfer of the activities in Americas, Kuwait, Kazakhstan, and Romania (five rigs and two active contracts), which is expected by 31 March 2023 and is subject, among others, to customary authorisations (including antitrust).”

The sale forms part of Saipem’s plan to focus on offshore drilling operations and increase its finances.

KCA Deutag said the transaction creates a global onshore drilling business, with a revenue of more than $1.7bn across core geographies in the Middle East and key markets in Latin America and Europe.

KCA Deutag CEO Joseph Elkhoury said: “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.

“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.”