For the year ending December 31, 2007, B.E.G. is expected to report earnings before interest, taxes, depreciation and amortization ("EBITDA") in excess of $2.8 million on anticipated revenues of more than $11.0 million. Additionally, B.E.G. is required to maintain certain levels of working capital until closing. Completion of the acquisition is subject to negotiation and execution of a mutually acceptable asset purchase agreement, completion of due diligence satisfactory to OMNI and approval by OMNI's senior lending institutions and the Board of Directors of both companies. The cash portion of the purchase price ($7.75 million) will be paid from available working capital.
Commenting on the proposed acquisition of the B.E.G. assets, James C. Eckert, OMNI's Chief Executive Officer, said, "The proposed acquisition of B.E.G. is an exciting extension of our fluid transportation services and our land-based equipment leasing operations. Through Charles Holston, Inc., we currently handle the transportation of oilfield drilling and production fluids in Louisiana. Our land-based equipment leasing operations through Rig Tools, Inc. have been primarily focused on Louisiana and Central Texas. With the recent acquisition of the assets of Bailey Operating, Inc., we have expanded our transportation service and our land-based equipment leasing operations into the northern regions of the Barnett Shale. The acquisition of B.E.G. strategically positions us for further geographic expansion of these services and also extends these services into the southern regions of the Barnett Shale and into East Texas. Additionally, we believe we will be able to capitalize on our existing customer relationships to geographically expand B.E.G.'s fluid service distribution facilities into other prolific onshore regions of the United States."
"The acquisition of B.E.G. brings with it an excellent management team," added Eckert. "Fluid service veterans Dan Keen and Mike Schooler will be instrumental in capitalizing on what we believe are excellent organic growth opportunities. We are excited with these additions to our management team and even more excited about the growth potential this acquisition affords OMNI."
Commenting on current operations, Eckert said, "While cash flow from our operating activities remains strong, we continued to experience adverse weather conditions in Texas and Oklahoma during the third quarter. As a result, we experienced increased operating costs during this period, which continued into the fourth quarter. This has negatively impacted some of our previously anticipated annual growth rates for all of 2007. While we cannot yet determine the impact on expected annualized pro forma revenues and net income for 2007, we currently expect our annualized pro forma adjusted EBITDA (including the previously closed acquisitions of Charles Holston, Inc. and Cypress Energy for the twelve month periods ended December 31, 2006 and 2007) to increase in the range of 15% for the 2007-year when compared to the 2006-year instead of the previously forecasted increase of approximately 24%," concluded Eckert.
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