Developing manufacturers, services, and technologies, Saudi Arabia move towards reducing its dependency on oil revenues in line with Saudi Arabia’s Vision 2030. Taqa venture’s deal of acquisition of Texas-based Schlumberger Ltd. rig business in the region for $415mn (SAR1.56bn) is the best example.
Saudi Arabia’s Industrialization & Energy Services Co., known as Taqa announced Sunday the acquisition, through its subsidiary, the Arab Drilling Company (ADC), of Schlumberger rig business in the Middle East for $415mn (SAR1.56bn).
Thanks to this deal, ADC’s Saudi operations will expand to include Schlumberger’s onshore oil-rig business in Kuwait, Oman, Iraq, and Pakistan. This means that 58 onshore and nine offshore rigs will be in ADC’s hand, raising the total number of ADC’s drilling rigs to 67 while the other oilfield services business in the region will be kept by Schlumberger.
ADC islooking forward to acquire any competitive services, technologies, or manufacturers to widen the complementary works of drilling and excavation and compete other global companies. The current plan’s priority is to promote the company business in the five countries as being promising markets, especially Iraq, considering its ability to work outside them, according to Taqa CEO, Abed AS-Saadoun.
It’s noteworthy that Saudi Taqa, partly owned by the Saudi PIF and holds 51% of ADC, expects $1.2bn in America and the Middle East drilling-rig business. Taqa agreed on paying $415mn to Schlumberger as a first step of the deal to be completed in the second half of 2019 after getting the necessary regulatory consents. Dedicating around $800mn of its own funds for the planned acquisition deals, Taqa may seek loans, sell bonds, or even consider an initial public offering in 2021 for the rest.
“Seeking to improve the technological and manufacturing capabilities, Taqa works on two deals in North America for the current year.” CEO, Azzam Shalabi said in an interview in Dammam, Saudi Arabia.
- The expansion of Taqa drilling works provided 1,500 jobs for Saudis within only one year.
Taqa’s businesses amount to SAR4.8bn; 51% of them comes from the drilling works, 31% comes from the manufacturing, and the rest comes from the surveying works. This acquisition deal was made after the largest expansion of Taqa; the introduction of 16 drilling rigs with investments of about $533mn (SAR2bn), and the introduction of more drilling rigs in Kuwait and Iraq to expand the company’s work there. ADC’s drilling works annually develop by 4% and 6% in Kuwait and Iraq respectively. After the acquisition, ADC will have three drilling rigs in Iraq.
These efforts, as a whole target diversifying sources of Saudi income other than oil sales. The world’s biggest oil exporter, Saudi Aramco strives for increasing oilfield services owned by the Kingdom in the region with large-scale expansion projects for the next ten years.