Enteq strengthens directional drilling product lines with acquisition of M&R Industries, Ltd. and Pro-Flow Fabrication Technologies, Ltd.
Enteq Upstream plc, the oil & gas field services company, is pleased to announce that it has acquired, through its indirect wholly-owned subsidiary, Enteq KMS LLC, substantially all of the business and assets and some of the liabilities of M&R Industries, Ltd. ("M&R") and Pro-Flow Fabrications Technologies, Ltd. ("Pro-Flow") for an initial consideration of $11.5 million. M&R, using the trading name KMServices ("KMS"), and Pro-Flow, manufacture and sell specialised parts and products for Directional Drilling and Measurement While Drilling operations.
M&R and Pro-Flow together employ 72 staff at their Houston facilities in Texas. The components and products supplied by KMS and Pro-Flow will complement the highly technical equipment supplied by XXT which was acquired by Enteq in May 2012. These acquisitions will share a common customer base, primarily consisting of North American focused oil & gas field service companies.
Enteq now intends to invest in M&R and Pro-Flow, expanding their facilities and broadening their product range. The combined, unaudited annualised revenues for M&R Industries with Pro-Flow for the year ending 30 April 2012 were approximately $15.2 million, with EBITDA of $2.4 million and profit before tax of $2.0 million (adjusted for ongoing costs).
The initial consideration of $11.5 million will be satisfied in cash from the Company's existing resources. An earn-out of up to $6.0 million is payable in cash in two instalments of up to $3.0 million each, within 90 days of the first and second anniversary of completion of the acquisition respectively. The amount of the earn-out relates to increased revenues at agreed minimum margins.
In addition, Enteq has also acquired from the vendor of M&R the 5 acre site with 29,940 sq ft of industrial facilities in Houston, Texas, from which the M&R and Pro-Flow businesses operate for a cash consideration of $2.3 million, which will be satisfied from the Company's existing resources.
Martin Perry, CEO of Enteq Upstream plc, commented:
"These latest acquisitions are further evidence of us delivering on our strategy of building a focused oil & gas products and technology business. The product range will complement that of our first acquisition, XXT, earlier this year, targeting the Directional Drilling and Measurement While Drilling market. We gain broad and complex product lines giving improved and regular access to customers. The new product lines are related to rig count and drilling activity and are generally ordered on a repeat basis. We intend to continue investing in product development and distribution.
"Enteq will continue with our strategy of acquiring value accretive businesses in the oil & gas field services sector. The target global market and potential for gain in market share for Enteq remains substantial."