Calgary, Estevan – MATRRIX Energy Technologies Inc. is adding another flavour to it’s multi-coloured fleet of drilling rigs in southeast Saskatchewan, with the announcement on Jan. 17 of the purchase of D2 Drilling Inc., which owns one heavy telescopic double drilling rig in the Weyburn/Estevan area of southeast Saskatchewan.
That brings MATRRIX’s fleet of heavy telescopic rigs to seven, operating under the Stampede Drilling name. MATRRIX purchased the assets of Vortex Drilling (three rigs) and the entire company of Stampede Drilling (three rigs) in the end of October 2017.
The agreement will see MATRRIX acquire all the issued and outstanding shares of D2 Drilling Inc., a private corporation for total consideration of approximately $3.53 million, consisting of the issuance of 6,666,660 common shares of MATRRIX at a deemed price of $0.45 per share, and a cash payment of $530,000 equal to D2’s working capital at the time of closing. The company noted in its press release all seven rigs were purchased for between $2 million and $3 million per rig.
D2 Shareholders will receive, for each D2 Share, 1.20992 MATRRIX shares and a cash amount equal to .09624, assuming D2’s working capital, as contemplated in the share purchase agreement, is $530,000 at the time of closing.
The deal will result in MATRRIX will acquiring one heavy telescopic double with strong historic utilization, Stampede will market the D2 rig alongside the six rigs currently within Stampede’s fleet as Rig 7.
The D2 rig is essentially a sister rig to the existing Stampede rigs, allowing Stampede management to share equipment and crews, maximizing efficiency, field performance, and cost control. These rigs typically operate with a crew of 16, and 21 if they have a swing crew. All seven of these modern telescopic double rigs where manufactured since 2011. All were manufactured in Estevan by the now-defunct Do-All Industries.
MATRRIX also announced it has entered into an asset purchase agreement with Derek Simpson, the chief executive officer of D2, pursuant to which MATRRIX will acquire additional drilling rig components from Mr. Simpson for aggregate consideration of $130,000 in cash. The purchase of these assets is anticipated to occur concurrent with closing of the acquisition.
MATRRIX president and CEO Richard Ryan stated, “We’re very pleased to welcome the D2 shareholders to MATRRIX as shareholders in this exciting consolidation opportunity. With essentially a $3.0 million purchase price, this single rig operation fits our existing rig fleet from a price, operational capability, utilization, and performance standpoint. We’re pleased to market this fully crewed, warm rig, with a solid reputation for performance, to our clients in the southeast Saskatchewan area.”
Management of D2 has agreed to not solicit further offers or initiate discussions or negotiations with any third party concerning the sale of D2. It is anticipated that the acquisition will close on or about January 19, 2018, subject to customary closing conditions including, but not limited to, the approval of the TSX Venture Exchange Inc.