Ensign Energy Services has entered into an agreement to acquire all outstanding shares of Citadel Drilling for $65 million, subject to customary closing adjustments and conditions.
Ensign will fund the acquisition using cash on hand and availability under its existing credit facilities. The company did not provide an anticipated closing date.
Citadel’s operations include six high-specification alternating-current drilling rigs serving the Permian Basin in the United States. Ensign expects the acquisition to increase its drilling capacity in the region by approximately 20%.
The Permian Basin spans parts of western Texas and southeastern New Mexico and is one of the most active oil and natural gas production regions in North America. Drilling contractors operating there require equipment capable of completing increasingly long horizontal well sections.
Citadel’s rigs include automated drilling control systems and other equipment designed for ultralong-reach lateral drilling. The fleet is configured similarly to Ensign’s existing equipment, which could simplify integration, maintenance, employee training and technology deployment.
The acquisition also includes experienced management personnel, technical crews and managed pressure drilling packages operated as Opla Energy Services.
Managed pressure drilling involves actively controlling pressure within a well during drilling. The technology can help operators manage challenging formations, reduce certain drilling risks and improve operational efficiency.
Ensign expects the transaction to broaden its customer base and increase its market share in the Permian Basin. The company also anticipates cost savings from combining the two organizations, although it did not quantify the expected synergies.
Citadel customers will gain access to Ensign’s larger operating platform, additional rig capacity, drilling technology and broader oilfield services. Ensign said it plans to preserve the customer relationships and service standards established by Citadel.
Ensign is headquartered in Calgary and provides land-based drilling and well servicing services in Canada, the United States and international markets. Its services include contract drilling, underbalanced and managed pressure drilling, equipment rentals, well servicing and production support.
TPH&Co, the energy business of Perella Weinberg Partners, is serving as Citadel’s financial adviser.
KEY QUOTES:
“The acquisition of Citadel’s business in the US Permian area provides Ensign with an expanded fleet of 6 high-spec AC drilling rigs supported by a top notch, experienced management team, highly trained technical crews, and a complement of managed pressure drilling packages with engineering support.”
“The Transaction broadens our client base, increases our Permian capacity by 20% and increases our market share in this highly active region, while delivering meaningful cost synergies.”
“The Transaction provides Citadel’s customers with the benefit of a significantly expanded operational platform, including access to additional rig capacity, advanced drilling technologies, and a broader suite of oilfield services, while preserving the strong customer relationships and service excellence that have defined the Citadel brand.”
Robert Geddes, President and Chief Operating Officer of Ensign Energy Services
