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

Precision Drilling Corp PDS penned an agreement to acquire CWC Energy Services Corp. for approximately C$141 million.

The acquisition price comprises 947,909 PDS shares valued at approximately C$88 million as of September 1, 2023, market close, C$14 million in cash, plus the assumption of CWC's outstanding debt.

With the deal, PDS expects to add 62 marketed service rigs in Canada, seven in Canada, and 11 in the U.S. to its fleet.

The transaction is expected to completed in Q4 FY23, subject to CWC shareholders and other regulatory approvals.

Synergies: Post-integration, PDS expects to realize annual operating synergies of around C$20 million and has identified about C$20 million of excess CWC real estate that it plans to monetize post-transaction closure.

The company anticipates the transaction to be accretive on a 2024 cash flow per share basis and aid its ongoing deleveraging plan.

"This acquisition supports our High Performance, High Value strategy as it allows us to expand our service offering in both Canada and the U.S. with high-quality rigs and field personnel. With the expected synergies and by further leveraging our scale, we believe the transaction will be accretive to earnings and provide significant cash flow to drive shareholder returns and support our debt reduction strategy. I am excited to welcome the CWC employees to the Precision team," said Kevin Neveu, PDS President and CEO.

PDS reaffirmed its plans of 2023 debt reduction of C$150 million in 2023 and C$500 million from 2022-2025.

In Q2, PDS' cash provided by operations came in at C$28 million vs. cash used in operations of C$(65) million a year ago. 

Price Action: PDS shares closed lower by 0.39% at $67.05 on Wednesday.