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Precision Drilling announces combination with Trinidad Drilling

Precision Drilling has announced that it has entered into an arrangement agreement with Trinidad Drilling pursuant to which Precision has agreed to acquire all of the issued and outstanding common shares of Trinidad on the basis of 0.445 common shares of Precision for each outstanding Trinidad Share pursuant to a plan of arrangement.

The aggregate transaction value is approximately $1,028 million, including the assumption of approximately $477 million in Trinidad net debt. Upon completion of the transaction, existing holders of Trinidad Shares will collectively own approximately 29% of Precision.

“This transaction creates exceptional value for both Trinidad and Precision shareholders,” Kevin Neveu, President and Chief Executive Officer of Precision, said. “The combination provides a truly unique opportunity to combine two highly focused drilling contractors that are pursuing similar growth initiatives and competitive strategies and importantly, operating similar Tier 1 assets.”

“From a strategic perspective, Trinidad is a perfect fit with Precision. We can realize immediate synergies, estimated to be over $30 million, through fixed cost reductions, operational efficiencies and reduced public company costs,” Mr Neveu continued. “Over the long term, the additional scale will further strengthen Precision’s operating leverage and positions the company to service our customers’ continued transition to high-performance drilling services with high-spec AC rigs. Additionally, this combination allows us to better differentiate our service offering through our combined industry-leading drilling technology initiatives and a larger operating platform. The incremental free cash flow generated through this combination will ensure Precision meets or exceeds our long-term debt reduction targets and improves our financial flexibility to pursue growth opportunities in the United States and in international markets.”

The Precision Board has unanimously approved the transaction and determined that the transaction and the entry into of the arrangement agreement are in the best interests of Precision. The Precision board has voted to recommend that holders of Precision shares vote in favor of the ordinary resolution approving issuance of Precision shares pursuant to the transaction. RBC Capital Markets, financial advisor to Precision, delivered a fairness opinion to the Precision board to the effect that, the consideration to be paid under the transaction is fair, from a financial point of view, to Precision.

Similarly, the Trinidad board has unanimously approved the transaction and determined that the transaction and the entry into of the arrangement agreement are in the best interests of Trinidad and its shareholders. The Trinidad board has resolved to recommend that holders of Trinidad securities vote in favor of the special resolution approving the transaction. TD Securities, financial advisor to Trinidad, delivered a verbal fairness opinion to the Trinidad board to the effect that, the consideration to be paid under the transaction is fair, from a financial point of view, to holders of Trinidad shares.

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