Helix expanding decommissioning presence in Gulf of Mexico with new acquisition
Houston-headquartered offshore energy services provider Helix Energy Solutions has inked a deal to acquire Louisiana-based, privately-held Alliance group of companies in a bid to widen and increase its decommissioning footprint in the Gulf of Mexico. This is seen by the firm as a “significant step” towards its energy transition business model.
Helix revealed on Tuesday that it had entered into a definitive agreement to acquire 100 per cent of the equity interests of the Alliance group of companies for $120 million cash at closing, plus the potential for post-closing earnout consideration payable in 2024, in the event the Alliance business achieves certain financial metrics in 2022 and 2023.
The terms of this deal stipulate that Helix has the option to pay any earnout consideration in cash, Helix stock, or a combination thereof and the agreement entails customary terms and conditions, including representations, warranties, and covenants including buyer-side protections.
The firm explains that Alliance provides services in support of the upstream and midstream industries in the Gulf of Mexico shelf, including offshore oil field decommissioning and reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift, and commercial diving services.
Therefore, this acquisition aligns with Helix’s energy transition business model, by expanding its decommissioning presence on the Gulf of Mexico shelf and advancing the company’s ESG initiatives by responsibly supporting the end-of-life requirements of oil and gas projects.
Owen Kratz, Helix’s President and Chief Executive Officer, remarked: “This acquisition complements Helix’s present deepwater abandonment offerings by adding shelf and facility abandonment capabilities, and significantly enhances our position as a full-field abandonment services provider, both in the Gulf of Mexico and globally. We also see possibilities to expand our opportunities within our existing late-life production business.”
Furthermore, this deal augments Helix’s decommissioning and life-of-field maintenance service capabilities through the addition of Alliance’s shallow water assets, including a fleet of Jones Act-compliant lift boats, offshore supply vessels, a heavy lift derrick barge, and diving vessels, as well as plug and abandonment systems, coiled tubing systems and snubbing units.
Steve Williams, the owner of Alliance, commented: “Our recent successes in acquiring and developing businesses and assets to establish Alliance as an offshore shallow water energy services company has led us to Helix, who we see as the industry standard in deepwater energy services. We are excited for the potential combination of Helix and Alliance and the value proposition we can bring to our customers.”
Moreover, this acquisition positions Helix to further penetrate the North American decommissioning market, with published reports forecasting nearly $3 billion of decommissioning expenditures between 2022 and 2025, and the potential to expand into the global market.
According to Helix, this transaction is expected to add accretive free cash flow and diversify its asset base and revenue stream, at an attractive valuation. This is based on the assets being acquired, the parties’ assumptions and market conditions, and anticipating Alliance’s potential annual EBITDA in excess of $30-40 million.
In addition, the acquisition preserves “strong financial position and liquidity,” as Helix’s pro forma cash, liquidity and net debt would approximate $145 million, $186 million, and $119 million, respectively. It also enhances the financial performance outlook of the company, with expected continued improvements in free cash flow resulting in expected strong liquidity and leverage position, based on Helix’s statement.
“We are thrilled at the prospect of adding Alliance to the Helix family, and we believe this acquisition is a meaningful step in Helix’s responsible participation in this age of energy transition,” concluded Kratz.
Helix claims that this acquisition is expected to close in mid-2022 and is subject to regulatory approvals and other customary conditions. However, the firm also explains that there is no guarantee that this transaction will be consummated on the terms or timeframe currently contemplated, or at all.
When it comes to Helix’s most recent deals in the Gulf of Mexico, it is worth noting that the U.S. player inked a multi-year contract with Shell Offshore in April 2022 for the provision of well intervention services.
The deal, which was expected to start in March 2022, includes 75 days of utilisation per year with the option to add additional utilisation days.