(Nabors, 15.Oct.2024) — Nabors Industries Ltd. and Parker Wellbore announced a definitive agreement under which Nabors will acquire all of Parker’s issued and outstanding common shares in exchange for 4.8 million shares of Nabors common stock, subject to a share price collar.
Parker provides drilling services across global energy markets. Through its Quail Tools subsidiary, Parker is the leading rental provider of high-performance downhole tubulars in the U.S. market. Internationally, Parker provides tubular rentals and repair services, with state-of-the-art facilities located in key geographies. Parker offers differentiated, casing and tubular running services in the U.S., the Middle East, Latin America, and Asia. Its portfolio also includes a fleet of 17 drilling rigs in the U.S. and international markets, as well as Operations & Maintenance services primarily in Canada and Alaska.
“This transaction brings together two of the storied names in our industry. The acquisition of Parker expands our high margin, capex-light Nabors Drilling Solutions global business, while solidifying the geographical footprint of our international drilling rig business. With Parker’s resilient free cash flow and healthy capital structure, this acquisition also is expected to deliver profitable growth together with improved leverage metrics,” Nabors President & CEO Anthony Petrello.
“Over the past five years, Parker has achieved an impressive record of increasing results and we expect this expansion to continue. We are excited to welcome Parker’s highly capable team to Nabors,” Petrello said. “With Nabors’ extensive global technology platform, we are confident we will extend Parker’s success even further.”
“We believe Nabors is the ideal partner to build on Parker’s 90-year reputation and performance. Parker’s leading position across key product lines and geographic markets aligns neatly with the Nabors’ footprint,” Parker President and CEO Sandy Esslemont. “Our portfolio and technology offerings combined with Nabors’ leading drilling solutions business and strong capital structure are expected to provide significant benefits to both Nabors’ and Parker’s customers, investors and the industry at large.”
Robust Strategic and Financial Rationale
Materially strengthens Nabors Drilling Solutions business
This acquisition adds a large-scale, high performance tubular rental and repairs services operation to the Nabors portfolio. Growth in wellbore lateral lengths is a key driver to increasing demand for drill pipe, both in the U.S. and in other important markets.
Parker’s casing running business complements Nabors’ own tubular services and affords the opportunity to migrate to Nabors’ integrated casing running model. Nabors expects this combination will establish the industry’s third largest provider, with presence in several key geographies.
Immediately additive to Free Cash Flow
The transaction is expected to result in immediate accretion to Nabors’ free cash flow. It is further expected to be increasingly accretive to valuation metrics as expense and revenue synergies are progressively realized.
Enhances scale and improves leverage metrics
On a combined company basis, adjusted EBITDA for the first six months of 2024 totaled $527mn. For the full year 2024, Parker expects to generate EBITDA of $180mn. With meaningful incremental EBITDA and only $100mn in additional net debt, the transaction is projected to improve Nabors’ leverage metrics.
Significant synergy potential
Nabors expects to realize up to $35mn of annualized expense synergies, with the majority achieved during the first 12 months post-closing. The primary drivers of these savings include reductions in both duplicate overhead and operational expenses, as well as savings in procurement. In addition to these amounts, Nabors expects to combine its existing drill pipe rental operations in the U.S. with Quail Tools, resulting in additional efficiency savings and revenue opportunities. Nabors also plans to leverage its global operations footprint to expand Parker’s international business.
Transaction details
The transaction has been approved by the Nabors and Parker Boards of Directors. Nabors will acquire Parker for 4.8 million shares and the assumption of net debt totaling approximately $100mn. The transaction is expected to close in early 2025, subject to customary closing conditions, as well as shareholder and regulatory approvals.
Conference call and webcast
Nabors will host a conference call to discuss the transaction. A slide presentation to accompany the conference call will be posted to Nabors’ investor relations website. The call will be held on 15 Oct. 2024, at 11:00 am CT with Anthony Petrello, Nabors’ Chairman, President and CEO, William Restrepo, Nabors’ CFO, and other members of Nabors’ senior management team.
____________________
