"This acquisition is an important milestone in our creation of a truly international company providing premium seismic data acquisition and processing services," commented Mr. Paul Crilly President and CEO of Norex. "Following our successful expansion into the Appalachian Basin and Rocky Mountain region of the United States, we are excited with the prospects of further growth in the expanding oil and gas industry in South America. We are proud to partner with the SAE team."
"Our management team has achieved a substantial market presence in Peru and has significant expansion opportunities in Colombia and Bolivia. Our merger with Norex provides us with the resources to continue our rapid expansion plans. We look forward to working with Norex to achieve our mutual goals of providing innovative seismic solutions to our clients in South America and beyond." stated Mr. Brian Beatty, co-founder of SAE.
The total consideration for the shares of SAE consists of cash on closing of approximately US$14.5 million, with remaining consideration payable to a maximum of US$22 million through a combination of cash and the issuance of common shares of Norex ("Common Shares") based on the subsequent financial performance of SAE. The potential amount and timing of the cash payment and issuance of Common Shares is described below.
SAE will provide Norex with a strategic foothold in South America through a proven management team. SAE has a strong customer base with large E&P clients in Peru and a backlog of work which is estimated to generate revenue of up to US$35 million. SAE has also passed rigorous pre-qualification processes with several large exploration and production companies providing SAE with the potential opportunity to work with some of the world's largest international E&P companies operating in South America. SAE's management team has extensive experience in the seismic industry in South America, and was formerly with the South American business unit of a publicly traded provider of integrated geophysical information and services to the petroleum industry worldwide.
The Acquisition is expected to close on or about August 31, 2007, and is subject to further due diligence by Norex, the completion of definitive agreements, securing financing for the cash portion of the initial purchase price and the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange (the "TSX"). In accordance with the policies of the TSX, shareholder approval of the issuance of the Common Shares which may be issued pursuant to the Acquisition will require approval by Norex's shareholders. The Company will satisfy this requirement by obtaining the written approval of holders of more than 50% of the outstanding Common Shares.
Westwind Partners Inc. acted as strategic advisor to Norex and will provide ongoing advisory services in connection with obtaining equity financing for the Acquisition.
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