Texas-based drilling contractor Pride International has agreed to sell its Latin America land-based drilling and workover business and its E&P Services business to Brazilian private eq
Texas-based drilling contractor Pride International has agreed to sell its Latin America land-based drilling and workover business and its E&P Services business to Brazilian private equity firm GP Investments in a deal expected to close by the end of September.
Under the agreement, GP Investments will pay USD1bn in cash at closing for the two business segments, subject to a working capital adjustment. Pride says proceeds from the sale, which are expected to be largely free of tax, may be used for general corporate and strategic purposes, including funding the construction of the company’s two ultra-deepwater drillships.
The Latin America land business consists of 73 land drilling rigs, 135 workover rigs and two lake drilling barges. The E&P Services business provides a wide range of services to complete, maintain and enhance production from oil and gas wells, including pressure pumping, integrated, directional drilling and other well services.
Combined 2006 revenues for the two business segments, which operate in eight Latin America countries, were USD823.9m, while revenues for the six months to the end June totalled USD472.8m. Following the close of the transaction, Pride’s remaining land-based drilling and workover operations will consist of five land drilling and workover rigs in Chad and two other land rigs in Kazakhstan and Pakistan.
‘The sale of our Latin America land-based business segments represent a significant milestone in the transition of our company and further supports our stated strategic direction,’ says Pride International president and chief executive Louis A. Raspino.
‘With the close of the transaction, contract drilling operations of Pride International will be almost exclusively offshore, with an increasing focus on deepwater and other high specification assets. Following the completion of this transaction, the percentage contribution to Pride’s earnings from operations by our deepwater and midwater floating rig fleets will increase significantly and would have represented in excess of 60 percent of earnings from operations during the second quarter of 2007 after excluding the results from the Latin America land-based operations.’
Goldman Sachs is acting as financial advisor to Pride, and Baker Botts is acting as legal counsel to the company.
GP Investments’ activities consist of its core private equity business and its asset management business. Since its establishment in 1993, GP Investments and its predecessors have raised more than USD2.5bn from Brazilian and international investors and have acquired 40 companies in 11 different sectors. In May 2006, GP Investments concluded its initial public offering, becoming the first listed private equity company in Brazil.