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EXHIBIT 99.1
NEWS
CONTACTS: STEVE KRABLIN
NATIONAL-OILWELL, INC.
(713) 960-5506
JAMES E. DEVANEY
DRECO ENERGY SERVICES LTD.
(403)944-3900
FOR IMMEDIATE RELEASE
NATIONAL-OILWELL AND DRECO ANNOUNCE
SIGNING OF DEFINITIVE COMBINATION AGREEMENT
HOUSTON, TX, MAY 14, 1997 - - National-Oilwell, Inc. (NOI/NYSE) and Dreco
Energy Services Ltd. (NASDAQ/DREAF, T.S.E./DRE.A) jointly announced today the
signing of a definitive agreement to combine the two companies.
The terms of the agreement provide for the exchange of Dreco common shares for
National-Oilwell common shares in a pooling of interests transaction that is
expected to be tax free to both companies. The exchange ratio is subject to a
collar and will provide Dreco's shareholders with 1.2 shares of National-
Oilwell stock, if during the 20 consecutive trading days ending 5 days before
closing, National-Oilwell's average stock price is between $36.00 and $47.25.
If the average stock price is above $47.25, the exchange ratio adjusts to
provide Dreco holders with $56.70 of National-Oilwell common stock, and, if the
average stock price is below $36.00, the exchange ratio adjusts to provide
Dreco holders with $43.20 of National-Oilwell common stock.
National-Oilwell would issue approximately 9.4 million shares of its common
stock valued at $366 million, based on a 1.2 exchange ratio. The combination
is expected to be accretive to estimated 1997 earnings per share of National-
Oilwell, excluding one-time charges related to expenses associated with the
transaction.
Joel V. Staff, Chairman and CEO of National-Oilwell, said, "The combination of
National-Oilwell and Dreco affords excellent opportunities for the
shareholders, employees and customers of both companies by significantly
enhancing the combined company's ability to provide high quality equipment and
services. Bringing together the respective strengths of these organizations
will create a unique capability to provide our customers with innovative and
reliable drilling systems solutions. In addition, the combination of Dreco's
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downhole products group, including its role as a leading independent supplier
of drilling motors, with National-Oilwell's distribution services presents
numerous opportunities to expand the already strong positions held by the
respective companies. The combined companies will have a strong balance sheet
and a current market capitalization in excess of $1 billion."
Fred Pheasey, Chairman of Dreco, said, "The range of products of the combined
drilling and well servicing equipment businesses will span from equipment and
packages for deep drilling requirements through to reentry drilling, well
servicing and coiled tubing well service and drilling applications, both land
and offshore. In addition, Dreco's downhole product business will benefit from
its tie with National-Oilwell." Robert L. Phillips, President and CEO of
Dreco, further added "This transaction provides an exciting opportunity for
Dreco's shareholders and employees. It is consistent with the company's longer
term strategic goals. The combination will create an organization that has
greater prospects for broad based growth in all of our businesses. In
particular, National-Oilwell's complementary products and distribution system
in addition to its worldwide installed base of equipment should provide
significant opportunities. Both companies have key customer relationships
which should be enhanced by this combination.
At closing, the shareholders of Dreco would have the option of receiving either
National-Oilwell common stock or Dreco exchangeable shares. In general, the
exchangeable shares would be exchangeable at the shareholder's option for
National-Oilwell common stock on a share-for-share basis and otherwise would
have equivalent economic and voting rights.
The merger has been approved by the boards of directors of both companies.
Credit Suisse First Boston acted as financial advisor to Dreco, and Merrill
Lynch & Co. acted as financial advisor to National-Oilwell. Holders of
approximately 52% of National-Oilwell's common stock, as well as the Chairman
and the President and CEO of Dreco, have entered into voting agreements in
support of the transaction.
The transaction, which is structured as a plan of arrangement under Alberta
law, is subject to various conditions, including shareholder approvals of both
companies, the approval of the Alberta Court, and other regulatory approvals in
both the U.S. and Canada. It is anticipated that shareholders meetings and the
closing of the transaction would occur during the third quarter of 1997.
National-Oilwell is a worldwide leader in the design, manufacture and sale of
machinery and equipment and in the distribution of maintenance, repair and
operating products used in oil and gas drilling and production. The company's
machinery and equipment include drawworks, mud pumps and power swivels, which
are the major mechanical components of rigs used to drill oil and gas wells.
Many of these components are designed specifically for applications in
offshore, extended reach and deep land drilling. The Company distributes
products and provides services, including complete customer inventory
procurement and management, from a network of approximately 120 service centers
and from its Houston headquarters.
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Dreco, based in Edmonton, Alberta, Canada, designs and manufactures specialty
drilling and well servicing equipment and downhole tools. Drilling and well
servicing equipment packages include those specialized for Arctic operating
environments, offshore platforms, desert service as well as conventional land
and offshore applications. Downhole tools include highly engineered drilling
products focused on the increased use of horizontal and other directional
drilling applications by oil and gas companies.
Statements made in this press release that are forward-looking in nature are
intended to be "forward-looking statements" with the meaning of Section 21E of
the Securities Exchange Act of 1934. Although National-Oilwell and Dreco
believe that the expectations described herein are reasonable, the actual
results of the combined company could differ materially from those currently
anticipated. Factors that could cause results to differ materially include:
changes in industry conditions and demand for oil and gas, and delays in the
ability of National-Oilwell to fully integrate the operations of Dreco and
achieve the strategic benefits described above. Other factors are set forth
under "Risk Factors" in Item 1 of National-Oilwells's Annual Report on Form 10-
K for the fiscal year ended December 31, 1996, filed with the Securities and
Exchange Commission, and under "Industry Conditions," "International
Operations," "Significant Contracts," "Operating Risks" and "Environmental
Matters" in Item 1 of Dreco's Annual Report on Form 10-K for the fiscal year
ended August 31, 1996, filed with the Securities and Exchange Commission.
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