AKITA Drilling Ltd. (ticker: AKT) and Xtreme Drilling Corp. (ticker: XDC) are combining under the AKITA name and will be operating 44 high-spec drilling rigs across multiple basins in the U.S. and Canada.
The transaction value is approximately CAD$209 million, which includes CAD$10 million of Xtreme’s net debt. Per agreement terms, Xtreme shareholders will receive 0.29 of an AKITA class A non-voting common share and CAD$0.59 in cash for each share of Xtreme common stock. Xtreme shareholders may also request to receive a different combination of the two options if AKITA does not exceed paying CAD$45 million or 22,235,458 AKITA class A shares.
ATB Financial has committed credit facilities of CAD$120 million and US$5 million to supplement AKITA’s cash balances to finance the cash consideration.
AKITA and Xtreme expect the transaction to be completed in the third quarter of 2018.
Upon closing, one board member from Xtreme will join AKITA’s board. Loraine Charlton, Linda Southern-Heathcott, Harish Mohan, Dale Richardson, Karl Ruud, Nancy Southern, Perry Spitznagel, Harry Wilmot, and Charles Wilson are presently board members.
The combination builds upon AKITA’s expansion into the Permian Basin in January, where it contracted Rig 90, an ultra-high spec deep-capacity rig. The combined company will have flexibility to deploy high quality drilling rigs on both sides of the border to optimize utilization and returns, the companies said. AKITA is engaged in the contract drilling business in Western Canada, the North, and the Permian Basin. It was an early adopter of pad rig technology has a dominant market share in heavy oil operations, with pad rigs making up approximately one-half of its deep capacity fleet.
The companies referenced planning possible newbuilds, including Xtreme’s 850XE premium spec platform or AKITA’s high spec multi rig platform design, both of which offer a premium value proposition for pad development. AKITA has offices in Alberta and Midland, Texas.
Xtreme Drilling’s 850XE premium spec platform; Source: Xtreme Drilling
Xtreme designs, builds, and operates high specification AC drilling rigs and has rigs under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in the United States. Xtreme has offices in Houston, Calgary and Luxembourg.
