First Reserve Secures Largest Private Equity Buyout of Drilling Service Co.

On Dec. 19, First Reserve continued to position itself as a global leader in hydrocarbon recovery by securing the largest-ever private equity buyout of a drilling services company.

At U.S. $1.82 billion, the buyout of Abbot Group, a company specializing in drilling services and rig operations, underscores First Reserve's investment strategy of investing globally in energy companies with enterprise values of up to $4 billion.

"If you look at the market trends, all of the future growth is taking place outside of the Americas," said First Reserve Director Neil Hartley. "West Africa is a good example of what underpins our investment thesis" in the acquisition of the Abbot Group.

Angola, Gabon and Nigeria are large-scale operations that take an investment of multiple years, added Hartley, and Abbot Group will assist us in making the most of those opportunities.

"Abbot Group leverages a lot of what we think the future is for upstream service," said Managing Director Joe Bob Edwards. He added that energy growth trends in the market point to the drill bit as being the key to success for future hydrocarbon recovery, and Abbot Group has succeeded in providing that key.

Although Abbot Group is the largest offshore drilling contractor in the North Sea, Hartley insisted that the buyout payoff comes from improved and increased global operations.

With the buyout, First Reserve can take advantage of long-term, international growth opportunities on the Eastern Hemisphere, in Russia, the Middle East and North and West Africa, building on First Reserve's existing infrastructure in chosen and existing markets.

First Reserve's commitment to growth is reflected in the fact that First Reserve will fund further expansion in markets including Russia, the Caspian area, the Middle East as well as North and West Africa. The management of Abbot Group will be providing $50 million of equity to demonstrate its commitment to the business.

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