Precision Drilling Corporation has entered into an asset purchase agreement to acquire the well servicing business and associated rentals assets of High Arctic Energy Services for an aggregate purchase price of $38.2 million, payable in cash.

Precision adds to its Canadian well servicing operation a fleet of 80 service rigs (51 marketed and 29 inactive). The Transaction provides Precision with rental assets, ancillary support equipment, inventories and spares, and six additional operating facilities in key basins, four of which are owned. Additional Transaction highlights include:

• Acquisition of high-quality assets with skilled and experienced field personnel and a strong customer following;
• Combined business will have marketed fleet of 134 service rigs and represents approximately 20% of Canadian industry well service activity;
• Leverages Precision Well Services' leading operational scale, generating significant synergies including expected annual operating cost savings of $5 million annually, realizable within one year; and
• Accretive acquisition that supports Precision's long-term capital allocation and de-leveraging plan through increased cash flow generation.

Precision's President and CEO, Kevin Neveu, stated, 
"This acquisition significantly expands our well servicing division with high quality rigs and field personnel, strategic regional positioning, and alignment with key customers. High Arctic's people are well known for their focus on safety and field execution and will complement Precision's High Performance, High Value operating strategy. The Transaction accomplishes needed consolidation in the well servicing industry, providing greater opportunities for our combined team, while bolstering service capabilities for our customers. With the expected synergies and further leveraging our scale, we believe this Transaction provides accretive earnings and significant cash generation potential supporting our debt-reduction strategy and our short-term and long-term debt reduction targets of $75 million in 2022 and $400 million between 2022 and 2025.

I am excited to welcome High Arctic employees to the Precision family."

PURCHASE SUMMARY

Precision is acquiring the Well Servicing and Rentals divisions (excluding working capital) for $38.2 million in cash. An initial payment of $10.2 million will be made at closing, with the remaining balance due in January 2023. The Transaction is subject to customary commercial closing conditions and is expected to close before the end of July 2022. CIBC Capital Markets is acting as exclusive financial advisor and Torys LLP is acting as legal advisor to Precision.

KeyFacts Energy Industry Directory: Precision Drilling