Saipem said it closed the sale of its onshore drilling business on Friday to KCA Deutag. The agreement was announced in June.
Specifically, Saipem’s activities in Saudi Arabia, Congo, United Arab Emirates and Morocco have been transferred.
The agreement provides for the sale of the entirety of Saipem’s onshore drilling operations to KCAD that includes the Middle East, Africa and the Americas, for an overall cash consideration of US$550 million, in addition to a 10% share participation in KCAD. Saipem will thus benefit from its minority shareholding in the enhanced entity. The final consideration is subject to standard pricing adjustments set out in the agreement.
Including the usual price adjustments, the consideration collected by Saipem consists of US$488 million in cash and the 10% participation in KCAD. Saipem will be entitled to appoint one member in the board of KCAD.
The remainder of the consideration, Saipem explained, will be collected upon transfer of the activities in Americas, Kuwait, Kazakhstan and Romania (five rigs and two active contracts), which is expected by March 31, 2023, and is subject, among others, to customary authorisations (including antitrust).
Saipem said this transaction is a milestone towards a more focused and resilient business model based on the growing trends of its reference markets, concentrating efforts in the offshore drilling business while supporting the achievement of its capital structure and liquidity objectives.
KCAD is a leading drilling, engineering and technology company, operating both onshore and offshore; the company has a fleet of 110 drill rigs in 20 countries, with over 8,000 people in its employ.
Saipem is a major contractor for ExxonMobil Guyana, operator of the offshore Stabroek Block. As with previous Guyana projects, Saipem is set to deliver a major subsea system for the country’s largest oil project – Yellowtail. The contract includes the Engineering, Procurement, Construction, and Installation (EPCI) of the Subsea Umbilicals, Risers & Flowlines (SURF).
