Helix Energy Solutions Group Inc. agreed on May 17 to acquire Alliance in the Gulf of Mexico for $120 million cash at closing, plus the potential for post-closing earnout consideration.
Alliance, a Louisiana-based privately held company, 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.
“Based on a number of market and regulatory drivers and our current expectations, we fully believe that the offshore oil and gas decommissioning market will grow significantly in the near term,” Owen Kratz, Helix’s president and CEO, commented in a company release.
Headquartered in Houston, Helix is an international offshore energy services company with more than 30 years of experience. In addition to a focus on well intervention and robotics operations, the company is pursuing an energy transition business model, which Kratz added the expanded decommissioning presence from the Alliance acquisition furthers.
“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,” he said. “We also see possibilities to expand our opportunities within our existing late-life production business.”
As part of the agreement, Helix will acquire 100% of the equity interests of the Alliance group of companies. The purchase price is equal to $120 million of 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.
Helix has the option to pay any earnout consideration in cash, Helix stock, or a combination thereof. The agreement contains customary terms and conditions, including representations, warranties and covenants including buyer-side protections.
Based on the assets being acquired, the parties’ assumptions and market conditions, and anticipating Alliance potential annual EBITDA in excess of $30 million to $40 million, the transaction is expected to add accretive free cash flow and diversify Helix’s asset base and revenue stream, at an attractive valuation, according to the company release.
“This transaction represents the culmination of many years of hard work, as we have grown Alliance from the ground up,” commented Steve Williams, owner of Alliance, in the release. “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.”
The acquisition is expected to close mid-2022 and is subject to regulatory approvals and other customary conditions. Pro forma, Helix cash, liquidity and net debt would approximate $145 million, $186 million and $119 million, respectively.
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