Italian energy services company and ExxonMobil subcontractor, Saipem, said on Wednesday it has agreed to sell its drilling onshore business to British-based oil drilling contractor KCA Deutag (KCAD) for $550 million to focus efforts on building out its offshore operations.
Saipem’s onshore drilling business operates globally outside Italy, with a focus in the Middle East and Americas, in 13 countries with around 4,000 people and a portfolio of 83 proprietary land rigs.
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.
And according to Saipem, the addition of its onshore drilling activities to KCAD will bring more opportunities for value creation – from operational synergies and inclusion of Saipem expertise.
Saipem expects to reap benefits from this as well, via the 10% minority stake in the enhanced entity. On a further note, the transaction represents a major step for Saipem towards a more focused and resilient business model.
The transaction does not entail any financial debt transfer from Saipem to KCAD.
Saipem is a major contractor for ExxonMobil Guyana, operator of the offshore Stabroek Block in Guyana. 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).