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Saudi Arabia’s TAQA drilling subsidiary agrees to acquire Schlumberger’s Mideast drilling rigs business for $415 million

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Saudi Arabia’s Industrialization and Energy Services Company (TAQA) announced Sunday that its drilling subsidiary, Arabian Drilling Company (ADC), has agreed to acquire Schlumberger’s Middle East onshore drilling rigs business in Kuwait, Oman, Iraq and Pakistan for $415 million (SAR 1.56 billion). The transaction transforms ADC into a regionaldrilling leader with one of the largest rig fleets, client portfolios and geographic footprints in the Middle East. ADC, a drilling rig partnership between TAQA and Schlumberger, was established in 1964 through a royal decree. 

Through this expansion, ADC, Saudi Arabia’s current market leader and drilling national champion, will become an industry powerhouse, operating a superior fleet of 58 onshore rigs and 9 offshore rigs across the MENA region. The combined firm will have more than 5,900 employees and builds on ADC’s long-standing reputation of reliably serving national and international oil and gas companies for over 55 years.

The transaction will combine the outstanding track records of the parties with respect to operations, quality of service, health, safety and environment. It will also create economies of scale and cost synergies, making ADC a regional leader, encompassing a diversified, multi-country and multi-client offering.

For TAQA, the expansion represents a major step forward in its ongoing group-wide transformation and growth strategy. TAQA’s 2021 strategy is to become a leading regional oilfield services and equipment (OFSE) company and is based on three key pillars: (1) creating value by strengthening the position and growth of its existing businesses and expanding into higher-tier services and new markets, (2) sustaining value by providing differentiated, best-in-class client services and safety, using the latest technologies, and, (3) realizing value and greater operational efficiencies by delivering more integrated client services that are safe, reliable and competitive. 

“This acquisition is fully aligned with Saudi Vision 2030. It unlocks value and drives growth across our entire value chain through a more integrated regional approach, while positioning a leading Saudi company as a global player,” said TAQA chief executive officer Azzam Shalabi, who is also chairman of the ADC Board.

He said the transaction also follows on from ADC’s accelerated expansion activity in 2018 when 16 rigs were commissioned to support the growth of Saudi Aramco.

“This new combination clearly demonstrates that TAQA and ADC are delivering on their transformation and growth strategies, and further strengthens what is already a long-standing and trusted partnership between TAQA and Schlumberger. We look forward to supporting ADC in the next phase of its expansion and have full confidence that this will benefit all stakeholders, most notably our regional clients,” he added.

The transaction is expected to close in the second half of 2019, subject to regulatory approvals.

Moelis & Company acted as exclusive financial advisor to TAQA, and Rothschild & Co. acted as exclusive financial advisor to Schlumberger.

Established in 2003, Industrialization & Energy services Company (TAQA) is a joint stock company owned by the Kingdom’s Public Investment Fund, Saudi Arabian joint stock companies and prominent institutional investors. It has majority stakes in a number of fast-growing, successful and innovative businesses, overseeing the management with a remit to support and expand Saudi Arabia’s oil field services and equipment manufacturing capabilities. 
TAQA’s portfolio of subsidiaries offers top-tier equipment and oilfield services including: drilling services, production and completion, seismic data and geophysical mapping, the manufacturing of OCTG and API pipes.
ADC, established in 1964, is a limited liability partnership between TAQA, which owns 51%, and Schlumberger, which owns the remaining 49%.

ADC’s drilling services are backed by over 55 years of operational experience and has a history of innovation, driving safety and drilling efficiencies. The company’s operations started with one drilling rig and will expand to 67 onshore and offshore rigs by the end 2019. ADC has a long-standing reputation and track record serving national and international oil and gas companies including Saudi Aramco, Al-Khafji Joint Operations (KJO), Schlumberger and Halliburton

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