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The ongoing recovery in oil price and increasing price certainty has resulted in upstream E&P deal activity leading the way. There are many notable examples of this during 2018, including Total closing out its acquisition of Maersk Oil and BP’s exchange of non-core North Sea and Alaskan assets with ConocoPhillips.
This trend appears set to continue, with recent announcements from Total and Chevron about divesting assets with Premier Oil and Faroe Petroleum stating their intentions to make possible acquisitions in the North Sea.
In recent months there has been a positive uptake in service sector M&A transactions led by the private equity (PE) community. One of the most recent high-profile examples of this saw US-based Carlyle Group acquiring Aberdeen-headquartered mechanical and electrical services group Enermech for £450m to facilitate an exit for Lime Rock Partners, which had initially invested in the business in 2008.
The Enermech transaction was quickly followed by Blue Water-backed 3T Energy Group acquiring safety training business Survivex and Hg Capital selling its interest in Atlas Knowledge, an e-
Learning and online training provider, to Mintra Group who are backed by US based PE investor Riverside Company.
Should the trading performance of PE portfolio companies continue to recover into next year then we anticipate further transactions in this space as PE investors look to recycle their funds.
Throughout 2018 we have also seen the larger service companies actively looking for bolt-on acquisitions in support of achieving their growth and strategic obejctives, including Oceaneering’s acquisition of seabed preparation and trenching business, Ecosse Subsea for a reported £50m together with Actuant’s acquisition of flange integrity and maintenance business Equalizer International.
We have also witnessed an increasing number of companies looking to raise finance to fund growth and increased working capital requirements, such as the significant recent growth capital investment in Aberdeen-based drone inspection and technology company Air Control Entech and EV Private Equity closing out its investment in subsea optimisation specialists Enpro Subsea at the beginning of the year.
At AAB we are keen to maintain strong positive momentum having completed more than 45 transactions in the first 10 months of 2018, including the Survivex, Enpro Subsea, Equalizer and Air Control Entech deals noted above. We anticipate that our overall deal activity in 2018 shall increase by 10% from last year and expect further growth in deal numbers in 2019.
Looking ahead to 2019, it was very encouraging to read the announcement earlier this year by Oil & Gas UK, stating that the number of new developments sanctioned was more than that of the previous three years combined which is anticipated to unlock £5 billion of new investment.
This can only be positive for the industry as it continues to respond to the challenging market conditions and stricter capital discipline.
In addition, it shall be interesting to see how the potential macro-economic uncertainties being caused by Brexit influence the M&A market. In our experience, whilst this is a discussion point between buyers and sellers, it is seemingly being offset against improving trading conditions as the oil price remains above $70 bbl, which is allowing the gap between the two parties in respect to price expectations to narrow and for deals to be done.
In terms of areas of the market where we anticipate increased activity, with greenfield and major brownfield projects at their highest since 2013 and from recent conversations with acquisitive trade players and PE investors who have “right sized†their own businesses, there is increasing interest with those who now have the resources to strike while the iron is hot and are keen to actively pursue companies of interest.
Therefore, companies concerned with the provision of manpower, engineering capabilities and/or drilling activities are likely to attract interest – especially those with niche technology which improve efficiencies and data capturing and predictive software enabler service offerings.
Our own pipeline of work has recently hit an all-time high in respect to the number of potential deal opportunities spread across E&P transaction support together with M&A and fundraising transactions involving business concerned in the energy services sector and we look forward to having a strong finish to the year and building on that into 2019.
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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