Archer has entered into an agreement to acquire Premium Oilfield Services, a well-established US well service provider within fishing and P&A related services. Premium has a first-class workforce with an excellent service reputation with major operators. Archer and Premium’s complimentary client base represents more than 80% of the estimated $15 billion spend in deepwater P&A and decommissioning in the Gulf of America up to 2040.
The acquisition will enable meaningful direct cost and capex synergies. Most notably, Archer will acquire a broad portfolio of well-maintained fishing equipment with an estimated replacement value of $35-40 million, which will give material third party rental savings.
Total consideration for the acquisition is $20 million, which will be financed through a contemplated private placement (see separate announcement). The acquisition is expected to close shortly after completion of the contemplated private placement. Completion of the transaction is subject to customary closing conditions, including a financing condition.
Highly accretive
The acquisition is highly accretive with payback of around 2 years, and proforma EV/EBITDA of around 2.5x including synergies. The transaction is estimated to improve Archer’s annual EBITDA by about 5% and the annual cash contribution by 8-10% (pro-forma, post synergies). Further, it will strengthen Archer’s foundation for increased shareholder returns and continued deleveraging, in line with our capital allocation strategy.
M&A track record
The acquisition adds to Archer’s established M&A track record. Since the start of 2023, Archer has invested ~$90 million in accretive bolt-on M&A transactions, and the acquired companies have delivered around $30 million in EBITDA over the last 12 months (pro-forma), implying a multiple of ~3x EV/EBITDA. Archer will continue to look for accretive and synergetic bolt-on acquisition targets.
Source: Archer
