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H&P's Takeover of Motive Signals Move to High Tech Directional Drilling

Helmerich & Payne Inc. (H&P), the largest U.S. land drilling rig contractor, has agreed to buy directional drilling technology expert Motive Drilling Technologies Inc., whose drillbits hone in on unconventional oil and natural gas deposits.

The Tulsa-based oilfield services operator agreed to acquire the Dallas-based company for $75 million at closing and $25 million in additional earn-out payments over the next few years based on future performance. The transaction is set to be completed in June.

"Improving the directional drilling process has been an industry focus for some time, given the value proposition of drilling wells more efficiently and with greater accuracy, resulting in a better quality wellbore," said H&P CEO John Lindsay. "We believe Motive's directional drilling technology to be leading edge and high-potential for the industry."

Motive has a singular focus, to provide "unique disruptive technologies and services that lower the cost and improve the accuracy and performance of drilling operations." Founded in 2011, Motive's proprietary Bit Guidance System is considered an industry leader in using cognitive computing to guide the directional drilling process.

Motive's algorithm-driven system considers the total economic consequences of directional drilling decisions, which helps to reduce drilling costs through more efficient drilling and increase hydrocarbon production with smoother wellbores and more accurate well placement.

Motive's directional drilling technology "has been proven on more than 200 horizontal wells to date," said CEO Todd Benson. "Our team is excited about this transaction and view H&P as an ideal partner for the continued growth in adoption of our technology, particularly as we look to advance efficiencies, quality and safety through automation."

Motive would remain based in Dallas and going forward, "will continue to be available to all E&P operators and directional drilling service providers, regardless of which drilling rig contractor is used," Lindsay said. "We have a strong and longstanding technology and innovation focus that has been an important part of our organization for many years. Motive is an exciting example of that opportunistic approach."

Motive was launched by Hunt Energy Enterprises, an entity of Hunt Consolidated Inc., which is the flagship of the legendary Ray L. Hunt companies. The privately owned Dallas group has been involved for decades in E&P, refining, liquefied natural gas, power, real estate, investments, ranching and infrastructure.

Hunt Consolidated Co-CEO Hunter Hunt said he was looking forward to Motive's "successful expansion within the industry as a result of this transaction." In addition, he acknowledged the "financial and development support of our partners, Formation 8 and GE Ventures."

Motive's technology already has been adopted by exploration and production companies (E&P) and by independent directional drillers, which sets it apart from other North American land drillers, according to Tudor, Pickering, Holt & Co. (TPH).

For example, land drillers Precision Drilling Corp. and Nabors Industries Inc. use an integrated approach -- rigs plus directional services -- to increase their exposure "to this powerful (and structural) industry trend in unconventional plays toward more horizontal footage drilled as a percentage of total footage drilled," TPH analysts said.

Calgary-based Precision’s management team said during the first quarter conference call it is deploying technology to automate many manual processes on its rigs and to integrate and automate directional drilling. Meanwhile, Nabors and Weatherford International plc agreed to partner in February to combine Weatherford's well construction expertise, managed pressure drilling (MPD) solutions, directional drilling capabilities and drilling hardware with Nabors' fleet of MPD-ready "SmartRigs" and land-optimized measurement-while-drilling systems.

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