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National Energy Services Reunited Corp. (NESR) agreed on April 1 to acquire service lines of Action Energy Co. WLL for around $50 million in cash, which Houston-based NESR said will position it as a top-tier oilfield service provider in Kuwait.
Action Energy is one of the leading indigenous oilfield services companies in Kuwait with multiple oilfield services contracts across both drilling and production operations. The transaction with NESR announced April 1 comprising oil services contracts in certain services lines worth more than $200 million, with operations across the production and drilling and evaluation segments.
“Deal lands right down the middle of the NESR strategic fairway as it fits with the company’s inorganic and organic expansion goals in the MENA region,” analysts with Tudor, Pickering, Holt & Co. (TPH) wrote in an April 5 research note.
“The transaction also augments NESR’s presence in one of their stated key target markets, Kuwait, which is an area where we expect incremental activity moving forward, both on the oil and gas sides of the hydrocarbon coin,” the TPH analysts added.
Under the terms of the agreement, NESR will pay Action Energy approximately $36 million at closing and an additional cash payment of approximately $13 million paid six months following the initial closing, subject to certain conditions, for total cash consideration of around $50 million. The agreement also includes additional earnouts of approximately $2 million to be paid over the contracts’ terms.
“Sticker price of $50 million ain’t all that eye-popping,” the TPH analysts also noted, “but we expect NESR to stick to its playbook and leverage the Action Energy Co.’s service businesses’ platform to pull through other product / service lines and beef up the growing drilling and production businesses in Action’s service porftolio.”
The transaction implies a multiple of less than 4 times EBITDA and is expected to close during second-quarter 2021, according to the company release.
Founded in 2017, NESR is one of the largest national oilfield services providers in the MENA and Asia Pacific regions. The company has over 5,000 employees in over 15 countries.
Freshfields Bruckhaus Deringer LLP and Meysan Partners served as legal advisers to NESR for the Action Energy transaction. International Counsel Bureau - Lawyers and Legal Consultants were legal advisers to Action.
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