July 25 (Reuters) - Oilfield services firm Helmerich &

Payne Inc said on Thursday that it will acquire Britain's

KCA Deutag International for $1.97 billion in cash, making it

one of the biggest rig providers in the Middle East.

Oilfield service providers have in recent quarters bet on

growth overseas as well as on deepwater projects to offset weak

demand in North America, which has seen a wave of mergers among

producers and lukewarm natural gas demand.

Helmerich said it will increase its Middle East rig

count to 88 from 12 rigs currently through this deal.

It also expects to realize about $25 million in savings by

2026, it said.

The transaction, which will be funded with cash on hand

and new borrowings, is expected to close before the end of the

year.

Industry insiders said that improving balance sheets and

margins could help kickstart dealmaking in the oilfield services

sector.

Top U.S. oilfield services firm SLB made a nearly $8

billion bid for ChampionX ( CHX ) earlier this year.

Offshore rig contractor Noble last month agreed to

buy smaller rival Diamond Offshore Drilling ( DO ) in a

cash-and-stock deal valued at $1.59 billion.