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Rabat – Italian international onshore and offshore drilling contractor Saipem has transferred its onshore drilling operations in Morocco to Scottish drilling company KCA Deutag.
The deal concerns Saipem’s contract with Sound Energy for the Tendrara gas project located in northeastern Morocco. In 2016, Sound Energy awarded the drilling contract of the first appraisal well at Tendara to Saipem. Since then, the Italian company has operated a medium-sized 1500 HP gas drilling rig on the site.
As of October 28, Saipem completed the transfer of its onshore drilling business in Morocco, Congo, Saudi Arabia; and the UAE to KCA Deutag for $488 million and a 10% share participation in the Scottish firm.
By March 31, 2023, Saipem expects to transfer the rest of its onshore drilling operations in the Americas, Kuwait, Kazakhstan, and Romania to KCA Deutag for $85 million.
The two drilling contractors announced the agreement in June 2022.
Read Also: Sound Energy Seeking Co-Investor for Tendrara Gas Operation in Morocco
Once the transfer is completed at the end of the first quarter of 2023, KCA Deutag says that it expects to employ more than 11,000 employees and generate over 50% of its earnings before interest, taxes, depreciation, and amortization (EBITDA) from the Middle East.
The group further forecasts to generate more than $1.7 billion in revenue from global onshore drilling businesses in the Middle East, Europe, and Latin America in addition to a $6.7 billion backlog (an accumulation of work that needs to be completed).
The Middle East represents solid growth opportunities for the Scottish drilling firm that aims to work closely with national oil companies in the region.
“By completing the first and largest phase of the Saipem Onshore Drilling acquisition, we will significantly expand and upgrade our business in the Middle East, a core market for the Group,” KCA Deutag CEO Joseph Elkhoury said.
The acquisition was carried out in consultation with Barclays and Houlihan Lokey. The two banks served as financial and debt advisors to KCA Deutag on the transaction.
By supporting the KCA Deutag and Saipem acquisition deal, the London-based Barclays is getting closer to its goal of entering the Moroccan banking sector.
In August, Barclays Market Head for Africa Amol Prabhu told African Business that the bank is “looking for business opportunities in Morocco,” adding the financial institution “is going forward with a new chapter in Africa.”
Barclays currently operates in South Africa, Kenya, and Nigeria in addition to Asia, the US, and Europe.
