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Newpark Resources to Acquire Drilling Fluids Business

Source: 3/4/2011, Location: Not categorized

Newpark Resources, Inc. announced it has entered into a definitive agreement with Rheochem PLC to acquire its drilling fluids and engineering services unit. Rheochem PLC is a publicly-traded Australian-based oil and gas company. Rheochem provides drilling fluids and engineering services to the oil and gas exploration and geothermal industries with operations in Australia, New Zealand and India. Newpark will pay approximately A$23.8 million at closing, subject to typical adjustments for working capital. Additional consideration may be payable based on financial results of the acquired business over a one-year earnout period, up to a maximum total consideration of A$45 million. Newpark expects to fund the acquisition price, including any earnout payment, from cash on hand. This acquisition is subject to the approval of the shareholders of Rheochem PLC and normal customary closing conditions and is expected to close in the second quarter of 2011.

"This acquisition is consistent with our strategic plan to expand our drilling fluids business globally, providing us with a footprint in the growing Asia Pacific markets," stated Paul Howes, Newpark's President and Chief Executive Officer. "We are also acquiring the Rheochem brand name, which is recognized in the Far East, and we will continue to operate under that name. Rheochem is a natural fit with Newpark, as employees of both companies share the commitment to provide operators with best-in-class drilling fluids and engineering services."

In the most recently completed fiscal year ended June 30, 2010, Rheochem PLC's drilling fluid services segment generated revenues of A$20.3 million and EBITDA of A$3.6 million, as reported in Rheochem PLC's audited financial statements. For the year ended June 30, 2009, revenues were A$34.2 million and EBITDA was A$6.1 million. Fiscal first half results for the six months ended December 31, 2010 were negatively affected by severe weather in Australia. Unaudited revenues and EBITDA of the drilling fluids segment for this six month period, as reported by Rheochem PLC, were A$10.2 million and A$1.1 million, respectively.

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Related Categories: Consultancy  Engineering  FEED  General  Maintenance and Repair  Process Technology Licensing  Production Engineering  Project & Resource Management 

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