Helix Energy Solutions Group Inc. agreed on May 17 to acquire Alliance in the Gulf of Mexico for $120 million cash at closing, plus the potential for post-closing earnout consideration.
Alliance, a Louisiana-based privately held company, provides services in support of the upstream and midstream industries in the Gulf of Mexico shelf, including offshore oil field decommissioning and reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services.
“Based on a number of market and regulatory drivers and our current expectations, we fully believe that the offshore oil and gas decommissioning market will grow significantly in the near term,” Owen Kratz, Helix’s president and CEO, commented in a company release.
Headquartered in Houston, Helix is an international offshore energy services company with more than 30 years of experience. In addition to a focus on well intervention and robotics operations, the company is pursuing an energy transition business model, which Kratz added the expanded decommissioning presence from the Alliance acquisition furthers.
“This acquisition complements Helix’s present deepwater abandonment offerings by adding shelf and facility abandonment capabilities, and significantly enhances our position as a full-field abandonment services provider, both in the Gulf of Mexico and globally,” he said. “We also see possibilities to expand our opportunities within our existing late-life production business.”
As part of the agreement, Helix will acquire 100% of the equity interests of the Alliance group of companies. The purchase price is equal to $120 million of cash at closing, plus the potential for post-closing earnout consideration payable in 2024, in the event the Alliance business achieves certain financial metrics in 2022 and 2023.
Helix has the option to pay any earnout consideration in cash, Helix stock, or a combination thereof. The agreement contains customary terms and conditions, including representations, warranties and covenants including buyer-side protections.
Based on the assets being acquired, the parties’ assumptions and market conditions, and anticipating Alliance potential annual EBITDA in excess of $30 million to $40 million, the transaction is expected to add accretive free cash flow and diversify Helix’s asset base and revenue stream, at an attractive valuation, according to the company release.
“This transaction represents the culmination of many years of hard work, as we have grown Alliance from the ground up,” commented Steve Williams, owner of Alliance, in the release. “Our recent successes in acquiring and developing businesses and assets to establish Alliance as an offshore shallow water energy services company has led us to Helix, who we see as the industry standard in deepwater energy services. We are excited for the potential combination of Helix and Alliance and the value proposition we can bring to our customers.”
The acquisition is expected to close mid-2022 and is subject to regulatory approvals and other customary conditions. Pro forma, Helix cash, liquidity and net debt would approximate $145 million, $186 million and $119 million, respectively.
Recommended Reading
CEO: Continental Adds Midland Basin Acreage, Explores Woodford, Barnett
2024-04-11 - Continental Resources is adding leases in Midland and Ector counties, Texas, as the private E&P hunts for drilling locations to explore. Continental is also testing deeper Barnett and Woodford intervals across its Permian footprint, CEO Doug Lawler said in an exclusive interview.
CNX, Appalachia Peers Defer Completions as NatGas Prices Languish
2024-04-25 - Henry Hub blues: CNX Resources and other Appalachia producers are slashing production and deferring well completions as natural gas spot prices hover near record lows.
Equinor Says EQT Asset Swap Upgrades International Portfolio
2024-04-30 - Equinor CFO Torgrim Reitan says the company’s recent U.S. asset swap with EQT Corp. was an example of the European company “high-grading” its international E&P portfolio.
Barnett & Beyond: Marathon, Oxy, Peers Testing Deeper Permian Zones
2024-04-29 - Marathon Oil, Occidental, Continental Resources and others are reaching under the Permian’s popular benches for new drilling locations. Analysts think there are areas of the basin where the Permian’s deeper zones can compete for capital.
ConocoPhillips: Permian Basin a ‘Growth Engine’ for Lower 48
2024-05-15 - ConocoPhillips views the Permian Basin as a “growth engine” within its Lower 48 portfolio, the company’s Midland Basin Vice President Nick McKenna said during Hart Energy’s SUPER DUG event in Fort Worth.