National Energy Services Reunited announces agreement to acquire SAPESCO

first_img National Energy Services Reunited announces agreement to acquire SAPESCO. (Credit: Linus Schütz from Pixabay.) National Energy Services Reunited Corp. (“NESR” or the “Company”) (NASDAQ:NESR) (NASDAQ:NESRW), a national, industry-leading provider of integrated energy services in the Middle East and North Africa (“MENA”) and Asia Pacific, announced their entry into an agreement pursuant to which NESR will acquire Sahara Petroleum Services Company S.A.E. (“SAPESCO”), the largest indigenous oilfield services company in Egypt with operations across the MENA region.Once completed, the transaction will result in NESR becoming a significant player in the Egyptian oil and gas industry, where it does not operate presently. This transaction will also add Industrial and Chemical services, which service the midstream and downstream sectors, to its portfolio. Furthermore, SAPESCO’s existing upstream Well Services contracts in Saudi Arabia, UAE, Libya and Kuwait will be a net addition to NESR’s contract portfolio.Under the terms of the agreement, NESR will acquire all issued and outstanding shares of SAPESCO in a cash and stock transaction. The transaction is comprised of $27 million in cash paid to shareholders at closing and issuance of NESR shares in two tranches as earn-outs at a minimum price of $10.00 per share based on a portion of 2019 EBITDA and performance metrics, using a multiple of up to 4.35x. The total company estimated 2019 Adjusted EBITDA is approximately $20 million.The $27 million cash component of the acquisition, as well as $22 million long term debt repayment, will be funded with cash from NESR’s balance sheet and the existing Revolving Credit Facility. Post-closing, NESR will also assume approximately $8 million of short-term debt from an existing local facility. The acquisition is expected to be completed by March 31, 2020, subject to standard regulatory approvals and satisfaction of customary closing conditions.Mr.Akmal Kortam, Owner and Founder of SAPESCO, commented: “I am very pleased to see the signing of this agreement and we look forward to joining NESR as our companies share common values and commitment to safety, service, technology and operational excellence. This transaction provides both our customers and employees with enhanced opportunities for growth and success.” Mr. Kortam added “We have nurtured SAPESCO to this scale and we believe it is the right time to leverage a larger platform to accelerate the growth opportunities for our product lines which are additive to NESR’s portfolio.”“This acquisition marks the entry of NESR into the growing and successful Egyptian Oil and Gas Industry,” said Sherif Foda, Chairman and CEO of NESR. “With SAPESCO’s long standing reputation in the market for best in class equipment, talented workforce, performance and safety, we are confident we will continue to benefit through the combined growth of our business. We are very proud to have SAPESCO as a partner and shareholder. We believe their unique position as the leader in Industrial Services and Pipeline Cleaning will add significant value to NESR in the region. This is evident with the scale of Zohr project and SAPESCO’s unparalleled performance to accomplish such a word class project in record time, which is a mark of the Egyptian ingenuity and know how. Since NESR’s start, our aim has been to work and invest in Egypt, and we were looking for the right time and right partner, I can now definitely say we teamed up with the best. We are committed to expand our scale and invest heavily in the years to come in our country.” Source: Company Press Release SAPESCO provides upstream, midstream and downstream solutions through its well services, measurement services, industrial services, civil services, drilling services and exploration services divisionslast_img read more