Precision Drilling Bolsters Service Offering Via Acquisition Of CWC Energy Services For C$141M - Precisio

7 Sep 2023

Precision Drilling Corp has entered into an agreement to purchase CWC Energy Services Corp for approximately C$141 million.

The cost of acquiring the company includes approximately 947,909 PDS shares, which are worth approximately C$88 million based on the market's closing value on September 1, 2023. Additionally, there is C$14 million in cash included in the deal, as well as taking on CWC's existing debt.

Through this agreement, PDS anticipates welcoming 62 already established service rigs in Canada, along with seven additional rigs in the same country, and an additional 11 rigs in the United States, bolstering its existing fleet.

The deal is anticipated to be finalized in the fourth quarter of the fiscal year 2023, pending approval from CWC shareholders and other regulatory authorities.

Collaborative benefits: After the integration is complete, PDS anticipates achieving yearly operating advantages of approximately C$20 million. Additionally, they have discovered roughly C$20 million worth of surplus CWC properties that they intend to convert into cash after the transaction is finalized.

The company expects that the transaction will have a positive impact on its cash flow per share in 2024 and will also assist in reducing its debt.

"This purchase aligns with our strategy of delivering exceptional performance and value, as it enables us to broaden our range of services across Canada and the United States by adding top-notch equipment and skilled staff. We anticipate that the collaboration will yield positive results, enhancing our earnings and generating substantial cash flow to benefit our shareholders and assist us in reducing our debt. I am thrilled to extend a warm welcome to the CWC employees, who will now be part of the Precision team," stated Kevin Neveu, President and CEO of PDS.

PDS restated its intentions to decrease its debt by C$150 million in 2023 and C$500 million from 2022 to 2025.

During the second quarter, PDS generated C$28 million in cash from its operations, compared to a cash outflow of C$(65) million in the same period last year.

Price Movement: PDS stocks concluded the day at $67.05 with a decrease of 0.39%.