INDEPENDENCE CONTRACT DRILLING AND SIDEWINDER TO MERGE
Independence Contract Drilling and Sidewinder Drilling jointly announced their entry into a definitive merger agreement pursuant to which ICD will acquire all of the outstanding equity interests in Sidewinder.
The merger will combine two highly complementary pad-optimal drilling fleets and operations focused in the Permian Basin, Haynesville region and other basins in Texas and its contiguous states.
Upon closing of the transaction, ICD will more than double the size of its pad-optimal rig fleet to 34 rigs following modest upgrades to five Sidewinder rigs. ICD expects to achieve synergies in excess of $8 million and believes the acquisition will be accretive to earnings per share, EBITDA per share and cash flow per share. The transaction is subject to customary regulatory approvals, approval by ICD’s stockholders of the issuance of the ICD common stock in the merger transaction and other customary closing conditions. The transaction is expected to close early in the fourth quarter of 2018.
Under the terms of the transaction, the Sidewinder unitholders will receive an aggregate of 36,752,657 shares of ICD common stock, representing approximately 49% of the total outstanding shares immediately following the closing of the transaction. ICD also will assume an estimated $50 million of Sidewinder net debt at closing.
Contemporaneously with the signing of the merger agreement, ICD has received binding commitments for a $130 million, secured, 5-year-non-amortizing term loan and a $40 million revolving credit facility, both to be entered into at the closing of the transaction. Proceeds from the term loan will be used to refinance both ICD’s existing debt and the Sidewinder debt assumed in the transaction.
Byron Dunn, President and Chief Executive Officer of ICD commented, “The benefits to ICD of this combination are significant and the industrial and geographic fit is obvious. We expect to gain significant size and scale, expand growth opportunities and realize significant synergies. We also expect to strengthen our cash flows and balance sheet, add operational expertise and capabilities, and create significant opportunities to market additional rigs into our expanding customer base.” (Source and image: Independence Contract Drilling)
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