Cathedral Energy Services and Precision Drilling have formally closed on Cathedral’s $6.35 million acquisition of Precision’s directional drilling business. The transaction includes operating assets and personnel of Precision’s directional drilling business, including its operations facility in Nisku, Alberta, along with an additional $3 million cash investment by Precision to support growth and expansion of Cathedral, including continuing the buildout of RapidFire measurement-while-drilling guidance systems and nDurance drilling motors. Additionally, the Transaction is expected to enhance margins as expenses related to rental equipment used by Precision are replaced with proprietary Cathedral tools.
As part of the transaction, Cathedral and Precision have entered into a strategic marketing alliance that is expected to support both parties’ technology initiatives. Precision’s Alpha digital technologies (AlphaApps, AlphaAutomation and AlphaAnalytics) are focused on automation and drilling performance and pair well with Cathedral’s downhole equipment and directional drilling expertise.
The parties have also entered into an investor rights agreement pursuant to which, among other things, Precision was granted the right to nominate a member to Cathedral’s board of directors and certain customary participation rights in respect of future sales of securities by Cathedral. Precision will maintain such rights for so long as it continues to hold 10% or more of Cathedral’s common shares.
Shuja Goraya, Precision’s current CTO, has been appointed to the Cathedral board of directors as part of the transaction.
“This strategic combination and alliance with Precision initiates some necessary consolidation and cements our position as one of the larger directional drilling contractors in the Canadian market space,” said Tom Connors, Cathedral President and CEO. “As the industry continues to evolve and drive efficiency through technology we are also excited about the capacity and potential, through this partnership, to develop directional specific apps and technology that further differentiate our offering and help set our performance apart in the marketplace.”
“Our investment and strategic partnership with Cathedral allow for the combined strengths of both entities to further advance directional specific technologies and provide a differentiated service offering. The combination of Cathedral’s people, technology, and industry-specific focus with our operating platform and Alpha suite of digital technologies will drive further value for our customers as we continue to push efficiency benchmarks within the industry,” said Kevin Neveu, President and CEO of Precision.