Helmerich & Payne set for Middle East expansion with new acquisition

Drilling contractor Helmerich & Payne (H&P) is to acquire global drilling company KCA Deutag, significantly boosting its Middle East presence

The acquisition will accelerate H&P’s international growth strategy, providing immediate and significant exposure to land operations in key markets in the Middle East, which generated around 70% of KCA Deutag’s calendar year 2023 operating EBITDA. Through the transaction, H&P will increase its Middle East rig count from 12 to 88 rigs, 71 of which are in Saudi Arabia, Oman and Kuwait. Based on award activity to date, the pro forma company would be one of the larger rig providers in the Middle East.

With KCA Deutag, H&P will have a strong geographic and operational mix across the U.S. and international crude oil and natural gas markets, and diversified geographical exposure in earnings and cash flow streams.
The acquisition will also strengthen cash flow and durability, given that the Middle East rig market is expected to grow in the coming years; generate attractive returns; and provide an opportunity to realise synergies, the company says.

Accelerating international expansion

President and CEO of H&P, John Lindsay, commented, 'This is a historic and transformative transaction for the company, and we are excited about what this means for H&P’s future, as it accelerates our international expansion particularly in the Middle East and enhances the company’s global leadership in onshore drilling solutions. KCA Deutag’s assets and operations will add resilient revenues, providing greater earnings visibility and cash flow generation. As a result, we expect to generate sizeable incremental cash flows and are confident this transaction will deliver near- and long-term growth and value creation for H&P shareholders.

“Our experience in the industry combined with a Middle East market poised for continued growth should be indicative of the importance and the compelling reasons for executing on this acquisition at this time. Acquiring KCA Deutag gives H&P immediate scale in core Middle East markets in a way that would be challenging to replicate organically.”

CEO of KCA Deutag, Joseph Elkhoury, added, “We look forward to joining H&P, combining the strengths of our people together with our geographical footprint, to create an organisation with an unrivalled global network, service capability and technology offering. The size, scale and financial strength of the combined organisation will provide a stable foundation for long-term growth and diversification to safeguard a sustainable and prosperous future for our people.”