Aker Announces Restructuring
International oil services, engineering and construction company Aker Solutions has decided to cultivate its core businesses by creating three separate companies. The new streamlined entities have a clear ambition to grow in their respective markets.
The new strategic direction, announced Thursday in Oslo, is the conclusion of a strategy process initiated by the Board in second quarter 2009.
"We have listened carefully to feedback from our customers and investors and analysed how we should position ourselves to meet their expectations," said Oyvind Eriksen, executive chairman of Aker Solutions.
"Their feedback is consistent. Our company enjoys strong positions in several market segments. However, to further accelerate our growth, we should be more focused, more flexible in our approach to customer specific requirements, and much more transparent," he explained.
Leading on from this, the next step is to cultivate the current Aker Solutions business into three separate companies:
The future Aker Solutions will be a fully-fledged provider of engineering, technologies, solutions and services for the upstream oil and gas industry. Its range of offerings will include deepwater drilling technologies, subsea oil and gas production systems, well services, mooring and offloading systems, wellstream processing technologies, as well as life-of-field solutions through its maintenance, modification and operations business.
Aker Contractors will be a specialized EPC (engineering, procurement and construction) company with a strong position in the North Sea field development market, key positions in selected international target regions, and a strong offering of distinct offshore products with a global market. The new company will continue to target offshore and onshore EPC field development projects with the ambition to maintain its strong position in the North Sea and further grow its international presence.
Process & Construction International, a leading global supplier of engineering and construction services to onshore industry segments.
After establishing P&C International and Aker Contractors as separate companies, Aker Solutions will become a thoroughbred engineering and technology company in the oil and gas industry. The company has a wide range of technologies and solutions for deepwater drilling and subsea oil and gas production systems and products. It also offers mooring, loading and deck equipment as well as well stream processing technology.
With the maturing of the oil and gas industry, increased recovery of oil and gas from old fields and field life extension programs are becoming increasingly important for oil companies. Aker Solutions offers a wide range of technologies and services in this respect. It is market leader in the well services segment on the Norwegian continental shelf and a technology leader in the emerging riser-based light well intervention market.
Its offering to customers worldwide is based on an engineering base which is second to none in the international oil and gas industry. The new Aker Solutions will have a dedicated engineering business stream, with more than 700 engineers located at its hub in Oslo, Norway. Its detailed engineering offices in Mumbai, India, and Kuala Lumpur, Malaysia, count 1650 and 350 staff respectively. Engineering resources dedicated to subsea, drilling, process, well services and other business units are in addition to the above.
Aker Solutions' head office will remain in Norway.
Aker Solutions has decades of experience as an EPC contractor for onshore and offshore oil and gas facilities covering a wide range of technologies and solutions. Aker Contractors will be established to further leverage the key deepwater and harsh environment experience and expertise built up through field development projects over more than 40 years. The new company will be tailored to meet the EPC market trends and client demands. It will get a focused and dedicated management and a mandate to enter into partnerships in order to establish reliable, flexible and competitive delivery models.
Aker Contractors will be a focused field development EPC company with core engineering, fabrication and project management competence originating from the company's two Norwegian specialised yards at Stord and Verdal and the field development engineering hub based in Oslo. Aker Contractors' head office will remain in Norway.
The company will have a strong foothold in the North Sea for large and complex offshore platforms and onshore processing plants, and provide distinct offshore products with a global market; the concrete gravity base structure (GBS) and steel platform substructure (jackets). Moreover it will have a solid portfolio of ongoing projects in Norway and internationally, including Kazakhstan (the Kashagan HUC project), Russia (the Sakhalin 1 project) and Canada (the Hebron GBS FEED).
The ambition is to maintain its strong position in the North Sea and further grow its international EPC deliveries. Internationally, the new company will further build its capabilities within EPC projects at a global scale, and capitalise on deepwater, GBS and jacket technologies. It will also develop its operations in Kazakhstan and other selected international markets where there is a strong need for project and construction management and yard development competency.
A proposal to list Aker Contractors on Oslo Stock Exchange will be presented to Aker Solutions' General Meeting. Listing is tentatively scheduled for second half of 2011.
Process & Construction International
The Process & Construction (P&C) business area is a leading global supplier of engineering, procurement, construction, commissioning, project execution and services in three onshore industry segments: mining and metals, energy and environmental and downstream oil, gas and processing.
As earlier communicated, P&C will in the future operate as a separate company under a separate brand name. A final decision on the structure of the separation is imminent, with a listing in 2011 as a possible outcome.
Not all of P&C will be part of the new company. The US EPC centre in Houston, and the Union Construction business located in the US and Canada, will both be transferred to Aker Contractors to further ramp up the company's already strong engineering and contracting capacity.
Aker Solutions expects that the restructuring will unleash energy and drive in each of the new, streamlined businesses and ultimately contribute to accelerate growth.
The market fundamentals for Aker Solutions are good. The company expects that annual average growth in the years 2011-2015 could be in the 9-15 percent range, partly as a result of growing markets, growing market shares and revenues from businesses acquired in the period.
"This will of course not happen by itself. All our current businesses must work persistently to improve operations and customer satisfaction. Being second best is simply not good enough for any part of Aker Solutions," says Eriksen.
With the Board's resolution on strategic direction, preparation will now start. On top of the Board's agenda is the appointment of CEOs for Aker Solutions and the new entity Aker Contractors.
The work that will lead to legal and financial separation of Aker Contractors will continue in the first half of 2011 and will be presented to the General Meeting for final resolution. The plan is to separate Aker Contractors from Aker Solutions through a share dividend to Aker Solutions shareholders. By that Aker Solutions' leading shareholder Aker Holding will maintain its current shareholding in both Aker Solutions and Aker Contractors.
Relevant amendments will be proposed to the agreement between Aker Holding's shareholders. The planned restructuring will not involve related party transactions between Aker Solutions' direct or indirect owners.