Aker Solutions Expands MENA Business with New Acquisition

Aker Solutions has agreed to acquire NPS Energy which will give it an increased presence in the MENA region. NPS Energy is part of oilfield services company National Petroleum Services.

Aker Solutions will pay an equity value of $350 million and assume approximately $110 million in net interest bearing debt at the time of closing, depending on the capital expenditure in 2012. The purchase price is a fixed equity value based on NPS Energy's March 2011 balance sheet.

“After the divestment of our non-oil and gas related business in 2010 and the demerger from the EPC contractor Kvaerner in 2011, this is our next major step in the transformation of Aker Solutions into a leading and global oilfield products, systems and services company,” said Øyvind Eriksen, executive chairman of Aker Solutions.

"We have established a new operating structure, which more transparently shows our broad range of technologies and customer offerings, and we have introduced regional management in North America and Brazil, which provides our customers with a single point of contact. We are now ready to take this successful formula into a new region, and it is not just another region. It is the most prolific oil and gas region of the world," says Eriksen.

"In order to succeed in the region, we need a strong distribution platform and well established customer relationships managed by a management team with a proven track record. Basically, this is what we achieve by acquiring NPS Energy," says Øyvind Eriksen.

NPS Energy currently employs approximately 900 people. The company's core offerings are well intervention services – including coil tubing, wire-line services, cementing, pressure pumping, well logging and testing – and onshore drilling services. It also provides perforation equipment. NPS Energy's main markets are across the Middle East and North Africa.

Aker Solutions' presence and activities in the Middle East have primarily focused on well intervention services in the United Arab Emirates, Oman and Saudi Arabia. But the company has also executed numerous product and system contracts in the region, including drilling technologies, surface wellheads and process systems.

During the first quarter of 2012 alone, Aker Solutions has announced contracts in the Middle East and North Africa regions totaling almost NOK 600 million. This includes a contract for drilling equipment to be used in the Middle East as well as awards for surface wellhead equipment to Bahrain and Egypt.

"Despite these recent successes and the fact that we have technology and products in our portfolio which is highly relevant for oil and gas fields in the region, we have to admit that our success rate in recent tendering has been fairly low. With the added local presence and the NPS management's deeper understanding of the market in the region, we expect to be able to target opportunities with much greater precision in the future," Eriksen explains.

He predicts that the businesses which will benefit the most from the NPS Energy acquisition in the short to medium term include the process technology business, the surface wellhead and equipment business, drilling equipment and engineering. A new engineering office will be established in the United Arab Emirates to tie the entire Aker Solutions offering together in a whole.