Akastor ASA said Dec. 7 it will create a leading provider of well-, reservoir- and software services through the combination of AGR Bidco AS and the Norway-based oil services investment company’s subsidiary First Geo AS.
The combination of AGR Bidco—a leading well, plugging and abandoning and reservoir service company—with Akastor’s wellsite geology service affiliate was made through agreements entered between Akastor and AGR stakeholders Silverfleet Capital, DNB Bank ASA and Nordea Bank Abp.
AGR, which has offices in Oslo, Stavanger, Aberdeen, Guilford, Houston, Dubai and Perth, has drilled more than 530 wells in 23 countries for 104 clients and conducted more than 1,500 reservoir studies. First Geo has offices in Oslo and Stavanger and is the leading provider of operation and wellsite geology services on the Norwegian Continental Shelf.
Akastor said the transaction will be carried out primarily as an asset deal, whereby assets in the current AGR legal structure and three legal entities will, together with First Geo, be transferred to a new legal structure. This, in turn, will be transferred to Akastor to establish the merged company named AGR.
On a consolidated basis, the merged company will have total year-to-date revenues of about US$58.9 million (NOK 500 million), EBITDA of US$2.1 million (NOK 18 million) and roughly 415 professionals as of September.
The merged company will be led by Svein Sollund, current CEO of AGR who in a statement said: “Changing market dynamics and pressure on margins enforce a fundamental change in how we manage our business. We are excited to have found such a good match in First Geo, enabling us to provide an even broader and deeper service offering to our clients.”
Further, the current managing director of First Geo, Helge Hedman Nyrønning, will take on a new leading role in the merged company.
Akastor will hold 100% of the shares in the merged company and 55% of the economic interest. The AGR stakeholders will own the remaining 45% economic interest regulated in an equity participation agreement between the AGR stakeholders and Akastor.
In addition, the merged company will roll over roughly US$31.8 million (NOK 270 million) of the debt of which DNB, Nordea and Akastor will hold about US$10.6 million (NOK 90 million) each.
In a statement, Karl Erik Kjelstad, CEO of Akastor, said: “I am pleased that Akastor continues to find industrial transactions that visualize the value in our portfolio. With First Geo as our contribution, we have created a new global company to build on in the years to come.”
Akastor said it expects to close the transaction at the end of first-quarter 2019. Closing of the transaction is subject to approval from Norwegian competition authorities and certain other customary conditions.
DNB Markets, a part of DNB Bank ASA and Nordea Bank Abp, filial i Norge, C&IB are acting as joint financial advisers to AGR in connection with the transaction. Advokatfirmaet Wiersholm AS are DNB’s legal advisers and Nordea and Advokatfirmaet BAHR are legal advisers to Akastor. (US$1 = 8.49 Norwegian Krone)
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