Major oil and gas acquisitions for lab services group

majorLABORATORY testing services company ALS is set to acquire UK-based Reservoir Group for $579 million following extensive due diligence completed as part of an exclusive sale process.
With major hub operations in Aberdeen, Dubai, Houston and Edmonton, Canada, Reservoir Group is a global provider of oil and gas services and equipment that assist with the evaluation, development and optimisation of oil and gas discoveries.
The company’s existing senior management team has committed to continue in the business, and will roll over 50 per cent of their equity in Reservoir Group into ALS shares. This will result in senior management having a 1.5 per cent pro forma shareholding in ALS.
Multi-year conditional escrow arrangements have been fixed for the two largest management shareholders, and key members of Reservoir Group’s senior management have agreed on retention bonuses.
ALS managing director and chief executive Greg Kilmister said Reservoir Group held a leading position in the global coring market, and was the principal surface logging provider in North America.
“The acquisition will considerably broaden our capabilities in upstream oil and gas and will strongly complement our existing laboratory services,” Mr Kilmister said.
“Reservoir provides a portfolio of eight distinct diversified technical services to the global oil and gas markets, for both conventional and unconventional resources.
“The missing piece to Reservoir’s service offering is a strong capability in laboratory services; ALS brings that capability to the services suite and the combined businesses will provide a compelling offering.”
Mr Kilmister said ALS intended to build at least three strategically placed oil and gas hub laboratories.
Separately, ALS has agreed to buy Earth Data — an Australian-based provider of gas sampling and analysis services to the country’s oil and gas industry — for $18 million;.
Earth Data also provides safety monitoring, sampling and analysis for fugitive emissions to Australian coal mines, and operates laboratories in Brisbane and the Hunter Valley.
The completion of both acquisitions was subject to limited conditions precedent, and expected to close in early August.
ALS estimates an underlying net profit after tax between $95 million and $105 million for the half year ending September 30, following the acquisitions: a mid-point decrease of 26 per cent on the record underlying net profit after tax reported in the first half of the 2013 fiscal year.