Two Texas drilling companies agree to $150 million merger deal

By Patrick C. Miller | July 24, 2018

Independence Contract Drilling and Sidewinder Drilling—both based in Houston—are entering into a merger agreement in which ICD will acquire Sidewinder for $150 million.

The merger combines two pad-optimal drilling fleets with operations focused in the Permian Basin, Haynesville region and other basins in Texas and adjacent states. The deal will enable ICD to more than double the size of its rig fleet to 34 rigs.

 “We expect to gain significant size and scale, expand growth opportunities and realize significant synergies,” said Byron Dunn, ICD president and CEO. “We also expect to strengthen our cash flows and balance sheet, add operational expertise and capabilities, and create significant opportunities to market additional rigs into our expanding customer base."

The transaction is expected to close early in the fourth quarter of 2018. ICD expects it to achieve synergies in excess of $8 million and believes the acquisition will be accretive to earnings per share, EBITDA per share and cash flow per share. 

Anthony Gallegos, Sidewinder president and CEO, the alignment with ICD is complementary to each company’s fleets and services. “Through the combination of our operations and premier assets strategically located in North America's most active basins, I believe we have compelling opportunities for operational synergies and growth, as well as career advancement for the employees of both companies,” he added.

The merger agreement and merger have been unanimously approved by the boards of directors of both companies and have received the requisite approval of the unitholders of Sidewinder.

Contemporaneously with the signing of the merger agreement, ICD has received binding commitments for a $130 million, secured, five-year-non-amortizing term loan and a $40 million revolving credit facility, both to be entered into at the closing of the transaction.  Proceeds from the term loan will be used to refinance both ICD's existing debt and the Sidewinder debt assumed in the transaction.