Precision Drilling, a directional drilling company, provider of safe and High-Performance services to the oil and gas industry; announced this Friday it entered into a strategic alliance with Cathedral Energy; the Calgary-based upstream company. The strategic alliance comes right after Cathedral completed the acquisition of Precision’ directional drilling services.
Firstly, the acquisition had a price of $6,350,000 and includes operating assets and personnel of the company; including its operations facility in Nisku, Alberta. As part of the transaction, Precision Drilling invested $3 million in cash, to support growth and expansion of Cathedral.
Secondly, such investment, included the buildout of RapidFire measurement-while-drilling guidance systems; and nDurance drilling motors. This special acquisition agreement intends to enhance margins, as expenses from rental equipment used by Precision will be replaced by proprietary Cathedral tools.
Thirdly, both companies, after securing this transaction agreement; structured a marketing alliance, which intends to produce new U.S. and Canadian customer opportunities for Cathedral; as well as potential integrated service offerings for customers.
Also recommended for you: Pinnacle Midstream advances development of Dos Picos natgas complex. Click here to read.
Precision Drilling and Cathedral alliance to reinforce directional drilling services in Canada
Moreover, the alliance intends to support both parties’ technology initiatives and lead the future of directional drilling services. Under the alliance, Precision’s Alpha digital products, which include AlphaApp; AlphaAutomation and also AlphaAnalytics, will pair with Cathedral’s premium downhole equipment and directional drilling expertise.
In addition, both companies also agreed that Precision would have the right to nominate a member to Cathedral’s board of directors; and, also, on certain customary participation rights in respect of future sales of securities by Cathedral. According to the statement, Precision Drilling will maintain such rights for so long as it continues to hold 10% or more of Cathedral’s common shares.
On the other hand, Precision Drilling nominated Shuja Goraya, its current Chief Financial Officer, to be the new member of Cathedral Board of Directors. Based in Houston, Texas, Mr. Goraya has a Bachelor of Engineering degree and also has worked for over 25 years in the energy services sector, most recently with Schlumberger Limited.
Finally, Tom Connors, Cathedral President & CEO, said. “This strategic combination and alliance with Precision initiates some necessary consolidation and also cements our position as one of the larger directional drilling contractors in the Canadian market space.”
