Sovereign Oilfield Acquires OIL Corporate Limited
Sovereign Oilfield Group has acquired OIL Corporate Limited, a group that provides structural engineering and fabrication services to the North Sea oil and gas industry for a total consideration of up to £4.75 million.
OIL was founded in 1976 and is based in Aberdeen. OIL has two manufacturing facilities in Aberdeen: Altens Industrial Estate, which comprises 2,100 sq.m of covered workshops and 600 square meters of office space and a 1,190 sq.m manufacturing facility located at Nord Quayside in Aberdeen Harbor with dockside access.
OIL provides a comprehensive range of structural engineering and fabrication services to the North Sea oil and gas industry, including:
- Topside structures and process pipework design and manufacturing;
- Onshore petrochemical plant fabrication;
- Quayside mobilization and seafastening services;
- Integrated design and build services for subsea structures and developments; And
- Dimensional survey capabilities;
OIL's customers include Shell Sigma 3, Technip, Wood Group, AMEC, KBR, Petrofac, BP, Amerada Hess, and CNR International. In the year ended 31 December 2004, OIL had audited turnover of £9.8 million, achieving a profit before taxation before goodwill amortization of £0.46 million. Net assets at 31 December 2004 were £376,000.
For the 12 months ended December 31, 2005, OIL had unaudited turnover of £12.5 million. Net assets at completion were approximately £1.6 million, which included net cash of £0.4 million.
The range of services provided by OIL is complementary to those of CPS and increases the number of customers as there is little customer overlap. With the acquisition of OIL, Sovereign is now able to offer its customers a comprehensive range of fabrication services to the oil industry from a range of facilities in Aberdeen. As a result of the acquisition, Sovereign Oilfield Group is now a significant supplier of fabrication services to the UKCS.
The initial consideration consists of £3.45 million, satisfied by a payment in cash at completion. A further consideration of up to £1.3 million will become payable based on the audited profit after taxation for OIL for the year ended 31 December 2005. The acquisition consideration has been funded from existing cash resources and a new £2.7 million facility with Barclays Bank.
Kendal Milne, Head of Oil and Gas Business Banking Scotland at Barclays commented: "This is an excellent deal for both parties. OIL is a strong business with good potential in a buoyant market. It will complement Sovereign's existing package of services and dovetail nicely with CPS, helping them achieve their aggressive growth strategy.
"This deal follows on from several recent completions and underlines our confidence in the deal flow in the oil and gas sector. Barclays will continue to actively target the acquisition finance market and expects to be involved in more deals of this type in the coming months."
Graham Burgess, Chief Executive of Sovereign Oilfield Group Plc, added:
"OIL is an important strategic acquisition and is complementary to the acquisition of CPS made prior to flotation. Sovereign is now a significant supplier of quality fabrication services in the UKCS and is continuing to work to internationalize this business. This continues our acquisition strategy and helps towards achieving our aim of forming a group capable of offering a broad range of oilfield services covering drilling services and fabrication to a growing client base."
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