Sondex Acquires Ultima Labs
Sondex has acquired Ultima Labs Inc, a private Houston based technology development company with a range of IP and products related to Logging While Drilling ('LWD') and Wireline applications for the oilfield service industry, for a consideration of up to US$9.225 million (£4.855 million), including sales related earn-out.
Ultima Labs is a technology development company based in Houston. The primary product that has been developed and is in the process of being commercialized is for LWD involving multiple depth resistivity measurements of the rock formations and their fluid content in order to asses the potential for oil or gas production. This technology is a complementary, next step, measurement for the existing LWD tools provided by Sondex drilling division.
Ultima Labs have a Memorandum of Understanding to provide these products, with an initial order to the value of $4.5 million, to a Chinese company that is also an existing customer of Sondex.
The management of Ultima, who have extensive experience in technology development for both wireline and drilling applications will remain with the business and participate in the integration of the technology and development of future product lines.
The maximum consideration of US$9.225 million (£4.855 million) will be settled as follows:
1. At completion a payment in cash of US$1.65 million (£0.87 million);
2. On each of the first and second anniversaries of completion a cash payment of US$1.5 million (£0.79 million);
3. A payment of up to US$2.25 million (£1.18 million) depending on Ultima Labs achieving certain milestones related to the development and sales of Ultima's CPR Tool, such amount to be satisfied by the issue of up to 415,584 ordinary shares in Sondex; and
4. Earn-out payments of up to an aggregate maximum of US$2.325 million (£1.224 million) paid annually in cash over a maximum of five years as a royalty from sales of specified Ultima products.
Funding for the maximum consideration and projected working capital requirements has been arranged through an extension to the existing bank facilities with the Bank of Scotland.
* using an exchange rate of £1: $1.9
Martin Perry, Chief Executive of Sondex, commented:
'This acquisition is an excellent strategic fit with Sondex's drilling division. Ultima Labs have an innovative highly regarded product range with strong IP protection as well as an extremely skilled and experienced development team, they will add to the range of high technology products that we can offer to our existing and new clients across the world.'