This news is classified in: Traditional Energy Oil and Gas
Aug 29, 2016
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High Arctic Energy Services Inc. is pleased to announce that it has entered into an asset purchase agreement to acquire all of the operating assets and business operations of Tervita Corporation's ("Tervita") Production Services Division (the "PS Division") for an aggregate purchase price of $42.8 million, payable in cash (the "Transaction").
Through this Transaction, High Arctic adds to its Canadian business operations a fleet of 68 marketed service rigs and related support equipment, a surface equipment rentals division and an engineering services division which provides solutions to assist in the management of abandonment and compliance programs. In addition, this Transaction provides High Arctic with seven new operational bases located in key basins in Alberta, five of which are owned.
Michael Binnion, High Arctic's Chairman, said, "With a 37-year history, Tervita and its predecessor, Concord Well Servicing, is one of the largest and preeminent leaders in western Canada's well servicing industry. Tervita's strong operational and safety performance has allowed it to achieve industry leading utilization with some of Canada's largest oil and gas exploration and production companies. This transaction diversifies our revenue base and provides us with immediate critical mass in the Canadian well servicing industry. We are excited about the operational synergies and future growth opportunities this broader platform provides."
With approximately $64.0 million generated in revenue on a trailing twelve month basis, ending June 30, 2016, the PS Division adds significant growth to High Arctic's Canadian business operations and provides a platform for future growth.
Tervita's PS Division management team along with the combined team of approximately 300 experienced and trained personnel will join High Arctic and will continue to operate the business post-closing, ensuring continuity of quality service for the PS Division's customers.
STRATEGIC HIGHLIGHTS
Through this Transaction, High Arctic adds immediate growth to the Corporation's Canadian operations and is an important and measured step forward in adding diversification to its geographic business operations. With 68 marketed rigs, Tervita's PS Division operates the third largest marketed well servicing fleet in Canada (source: CAODC) and through its strong operational and safety performance has achieved industry leading utilization with some of the industry's largest exploration and production companies.
The combination of Tervita's PS Division with High Arctic's existing snubbing, N2 and rentals business in Canada will provide High Arctic a strong foundation to support future growth by leveraging off the following transaction benefits:
Scale - Third largest marketed well servicing fleet in Canada and the second most active as measured by total hours of operation in 2015 and the first half of 2016 (source: CAODC), provides for efficient and cost effective operations.
Expanded Customer Base - The addition of the PS Division and its long-term relationships with a number of the industry's top-tier exploration and production companies further enhances High Arctic's customer base.
Industry Leading Safety Performance - Safety is a cornerstone of High Arctic's business and the addition of the PS Division's industry leading safety performance further strengthens High Arctic's safety culture which is sought by the industry's leading exploration and production companies.
Leverage to Production - Revenues are closely tied to production and the optimization of existing wells, which provides more stable activity levels.
Expanded Service Offering - Ability to provide additional service solutions to High Arctic's customers.
Geographic Coverage - The addition of seven new operating bases, five of which are owned, provides High Arctic with coverage across many of the key operating basins in Alberta and British Columbia.
Diversification - Provides High Arctic with additional leverage to Canadian oil and gas activity and in particular long-term established heavy oil projects.
