Wood Group acquires Mitchell's Oil Field Services
21 September 2012
Wood Group acquisition of Mitchell's Oil Field Services significantly increases
presence in US Bakken shale region
Wood Group has agreed to acquire Mitchell's Oil Field Services, Inc.
("Mitchell's"), a provider of maintenance, installation and fabrication
services in the oil-rich Bakken shale region for an initial consideration of
$135m. Further earn out payments due in the period to 2015 based on Mitchell's
future performance may be payable. The acquisition is expected to be earnings
enhancing from completion.
The transaction is subject to anti-trust approval in the US, with completion
expected in the fourth quarter of 2012.
Mitchell's will operate within Wood Group PSN, and will complement the
division's existing operations & maintenance, construction supervision and
survey services in the region. Mitchell's will continue to be led by the
existing management team.
"We are pleased to welcome Mitchell's into the Wood Group PSN family," said
Derek Blackwood, president - Americas for Wood Group PSN. "The addition of
Mitchell's significantly expands our service offering and increases our
presence in the region to approximately 650 personnel operating from nine
locations. We look forward to extending relationships with existing clients and
building relationships with new clients in the Bakken by offering them our full
range of complementary services.
"This acquisition is in line with our strategy to expand our presence in the US
oil shales and follows our purchase earlier this year of Wood Group Duval,
which services the Eagle Ford shale region in South Texas."
Todd Appel, president of Mitchell's said, "We are extremely excited to be
joining Wood Group. Mitchell's has achieved strong growth over recent years,
and we anticipate the strong oil shale market, momentum in our business and the
support of Wood Group will enable continued growth."
-end-
Notes to Editors
Wood Group (John Wood Group PLC) is an international energy services company
with $6.0bn sales, employing more than 41,000 people worldwide and operating in
50 countries. The Group has three businesses - Engineering, Wood Group PSN and
Wood Group GTS - providing a range of engineering, production support,
maintenance management and industrial gas turbine overhaul and repair services
to the oil & gas, and power generation industries worldwide. www.woodgroup.com
Wood Group PSN is a global provider of pre-operations, hook up & commissioning,
operations & maintenance, engineering, construction, project management,
training and decommissioning services to the energy industry. Employing over
26,000 people in more than 35 countries, Wood Group PSN offers high integrity,
brownfield services that support customers to optimise performance, maintain
production, reduce operating costs and provide integrity assurance.
www.woodgroup-psn.com
Mitchell's Oil Field Services, founded in Sidney, Montana, in 1977, provides
maintenance, installation and fabrication services to the North Dakota and
Montana onshore oil & gas market. Mitchell's is owned by Stone Arch Capital, a
Minneapolis-based private equity group, www.stonearchcapital.com, and
management. www.mitchellsoilfield.com
Additional information in relation to the transaction
The total consideration is made up of an initial payment of $135m, plus three
additional annual earn out payments of up to $47.5m in aggregate. The
consideration will be satisfied from the Group's existing bank facilities. The
gross assets at 31 December were $72m, and profit before tax for the year ended
December 2011 was $13m. Annualised pro forma EBITA, adjusted for certain non
recurring items, for the year ended December 2011 was $19m.
The Bakken Shale is one of the most active exploration and production oil
formations in the US. Stretching over 200,000 square miles of the Williston
Basin, the Bakken region, located in the states of North Dakota and Montana and
the Canadian provinces of Manitoba and Saskatchewan, has been actively
producing oil using conventional methods since the 1950s. Since the recent
advent of unconventional drilling and production technology (eg horizontal
drilling and hydraulic fracturing) the Bakken has experienced strong growth.
In 2008, the US Geological Survey estimated that there was between 3 - 4 bn
barrels of recoverable oil in the Bakken. This figure was later revised in 2010
by the North Dakota Industrial Commission (`NDIC') to 6.2 bn barrels. Oil
production in the US Bakken Shale has increased from about 98,000 bpd in 2005
to 310,000 bpd in 2010 and an average of more than 630,000 bpd in May 2012
(Source: US Energy Information Administration.) Daily production growth is
anticipated to continue.
For further information contact
Media enquiries:
Bobbie Ireland, Director, Corporate Communications - Americas, Wood Group
Tel: +1 281 828 3505, email: bobbie.ireland@woodgroup.com
Carolyn Smith, Director, Corporate Communications - Eastern Hemisphere, Wood
Group
Tel: +44 (0) 1224 851 099, email: carolyn.smith@woodgroup.com
Investor and analyst enquiries: Nick Gilman, Head of Investor Relations &
Corporate Communications, Wood Group
Tel: +44 (0) 1224 851404, email: nick.gilman@woodgroup.com
Andrew Rose, Investor Relations Manager, Wood Group
Tel: +44 1224 532716, email: andrew.rose@woodgroup.com
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