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Ensign Builds Drilling Presence in U.S. Shales

Calgary-based Ensign Energy Services Inc. is boosting its services in the U.S. onshore through an agreement to acquire Rowan Cos. Inc.'s land drilling division for US$510 million in cash.

According to Ensign, the assets include 30 deeper-capacity electric land-drilling rigs, all of which are equipped with top drives. The fleet is suited for extended-reach drilling in shale plays like the Haynesville, Bossier Sands and Eagle Ford, it said.

Ensign, which has existing U.S. operations in the Rocky Mountains and California, said the purchase would increase its global fleet to 340 marketed drilling rigs, including 115 in the United States. As of February, Rowan had 18 land rigs in Texas, eight in Louisiana, two in Oklahoma and one each in Alabama and Alaska.

"The addition...will enhance Ensign's ability to capitalize on strengthening industry fundamentals in the United States and to access a diverse customer base in the increasingly important oil and natural gas resource plays of the southern United States," the driller stated.

The transaction also allows Rowan to exit the onshore business to concentrate on offshore markets. In June Rowan agreed to buy two deepwater drillships for about $1.2 billion. Ensign said the transaction would require regulatory approval, which it expects to obtain with two months.

"We expect that our after-tax proceeds, estimated at approximately $370 million, will be redeployed into our offshore drilling business and recently announced deepwater expansion," said Rowan CEO Matt Ralls. "We believe our high-specification land rig fleet...will have significant opportunities with such a large and well respected operation."

Ensign ranks sixth among top U.S. active land rig operators, according to data from Smith Bits, which places Tulsa-based contract drilling company Helmerich & Payne Inc. at the top of that list with 200 active rigs -- 11.4% of the U.S. total. Helmerich & Payne recently said it had agreements in place with eight U.S. exploration and production companies to build and operate 12 of its proprietary FlexRigs, which are to begin onshore operations in fiscal 2012 (see Shale Daily, July 7).

Patterson-UTI Energy Inc., which ranks second among active land rig operators, earlier this year said its earnings had been lifted by higher dayrates and more shale rigs (see Shale Daily, Feb. 8).

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