KCA Deutag International Ltd and Helmerich & Payne, Inc. (H&P), which designs, fabricates and operates high-performance drilling rigs around the world, have announced a definitive agreement under which KCA Deutag will be acquired by H&P for US$1.9725 billion.

Joseph Elkhoury, CEO of KCA Deutag, said: "This announcement represents a significant milestone in the strategic transformation journey of KCA Deutag and delivers benefits to all stakeholders: our employees, customers, shareholders and the communities where we live and work.

"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. With similar customer-centric cultures, focused on safety and delivering incident-free, quality services and innovative technology, we will leverage H&P's operational processes and practices to accelerate efficiencies and optimise operational excellence for our customers.

"Once completed, this transaction is expected to deliver multiple growth opportunities for our people and customers while facilitating value realisation for our investors."

This is a historic and transformative transaction for the company

President and CEO of H&P, John Lindsay, added: "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.

"H&P has a history of having a thoughtful and managed approach to running and investing in the business and is well versed in the challenges brought about by crude oil and natural gas volatility. 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. Furthermore, as there is very little geographic overlap, we view this transaction more than just acquiring assets, but rather acquiring operations with quality people.

"As a combined company, we will maintain our shared customer-centric approach and safety focus. We look forward to welcoming KCA Deutag's talented employees to the H&P family and working together to provide exceptional performance and value to customers across our global markets, now on a much larger scale."