AKITA DRILLING AND XTREME DRILLING TO MERGE
AKITA Drilling and Xtreme Drilling announced their entry into a definitive arrangement agreement to combine the two companies to create a leading intermediate North American land drilling contractor. Both companies are headquartered in Calgary. The combined company, which will operate under the AKITA name, will have a fleet of 44 high-spec drilling rigs with operations in major resource basins in the US and Canada. The combination will be completed by way of a plan of arrangement under the Business Corporations Act (Alberta).
The combination with Xtreme, which has a strong operating history and rig technology credentials in the US, provides AKITA with immediate scale in the US market, building upon its recent strategic expansion into the Permian.
The total transaction value is approximately $209 million, including the assumption of approximately $10 million of Xtreme’s net debt (as at March 31, 2018). Under the terms of the transaction, Xtreme shareholders will receive 0.29 of an AKITA Class A non-voting common share and $0.59 in cash for each share of Xtreme common stock. An Xtreme shareholder may elect to receive a different combination of AKITA Class A shares and cash, in each case subject to proration such that the aggregate consideration to be paid by AKITA will not exceed $45 million in cash and will not exceed 22,235,458 AKITA Class A shares. The consideration to be received by Xtreme shareholders represents a 32% premium over the 20-day volume weighted average price of the Xtreme shares for the period ended June 4, 2018.
The cash consideration will be financed from AKITA’s cash balances and new credit facilities of $120 million and US$5 million which have been committed by ATB Financial.
The combination provides the following compelling benefits to the shareholders of both companies:
• Combines two complementary companies, each with a focus on high-spec drilling rigs and disciplined operations that deliver leading performance for customers
• Provides AKITA with immediate scale in the US market, building upon its recent strategic expansion into the Permian, and the potential for premium dayrates and margins
• Maintains a leading position in active Canadian markets, including oil sands maintenance drilling operations, with leverage to a longer-term recovery in Canadian drilling activity
• Expands operational and customer network across all major North American resource basins providing the flexibility to deploy high quality drilling rigs on both sides of the border to optimize utilization and returns
(Source and image: Akita – Akita Rig 47)
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