Moody’s could raise KCA Deutag

Moody's Investors Service said it placed the ratings of KCA Deutag Alpha Ltd. (KCA) on review for upgrade, including its Caa1 corporate family rating, Caa1-PD probability of default rating and he Caa1 rating on its $375 million guaranteed senior secured term loan B due 2020 and $275 million guaranteed revolving credit facility.

The agency also placed the Caa1 rating of the $375 million guaranteed senior secured notes due 2021 and $535 million guaranteed senior secured notes due 2022, both issued by KCA Deutag UK Finance plc, under review for upgrade.

The outlook was changed to rating under review from stable.

The review was prompted by the announcement that KCA signed a definitive agreement to acquire all of the shares of Oman based oilfield service company Dalma Energy LLC for a total enterprise value of $660 million, or 6 times Dalma's expected fiscal year 2017 EBITDA.

"The transaction combines Dalma's strong presence in the onshore drilling services in Oman and the Kingdom of Saudi Arabia with KCA's well established presence in the Middle East, creating the number two player in terms of rig fleet," Hubert Allemani, Moody’s vice president, senior analyst and lead analyst for KCA, said in a news release.

“"The acquisition enhances KCA's market position in the region while growing the share of its onshore business activity, less vulnerable to oil price than its offshore business. KCA will benefit from Dalma's contracts in place with two top tier oil company in the region, Petroleum Development Oman and Saudi Aramco. The combination of Dalma and KCA operations in Oman could potentially drive cost savings and synergies over time. These potential strategic benefits have prompted our review for upgrade."

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