Helix Energy Solutions to Acquire Alliance Companies in Gulf of Mexico

Source: www.gulfoilandgas.com 5/17/2022, Location: North America

Helix Energy Solutions Group, Inc. has entered into a definitive agreement to acquire 100% of the equity interests of the Alliance group of companies (collectively “Alliance”) for $120 million cash at closing, plus the potential for post-closing earnout consideration.

Alliance Overview
Alliance is a Louisiana-based privately held company that 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.

Transaction Highlights
- Aligns with Helix’s Energy Transition business model, by expanding its decommissioning presence in the Gulf of Mexico shelf and advancing Helix’s ESG initiatives by responsibly supporting end-of-life requirements of oil and gas projects
- Augments Helix’s decommissioning and life-of-field maintenance service capabilities through the addition of Alliance’s comprehensive shallow water assets, including a fleet of Jones Act-compliant lift boats, offshore supply vessels, a heavy lift derrick barge and diving vessels, as well as plug and abandonment systems, coiled tubing systems and snubbing units
- Positions Helix to further penetrate the North America decommissioning market, with published reports forecasting nearly $3 billion of decommissioning expenditures between 2022 and 2025, and potential to expand into the global market
- Based on the assets being acquired, the parties’ assumptions and market conditions, and anticipating Alliance potential annual EBITDA1 in excess of $30-40 million, the transaction is expected to add accretive free cash flow1 and diversify Helix’s asset base and revenue stream, at an attractive valuation
- Preserves strong financial position and liquidity,1 as Helix’s pro forma2 cash, liquidity and net debt1 would approximate $145 million, $186 million and $119 million, respectively
- Enhances financial performance outlook, with expected continued improvements in free cash flow resulting in expected strong liquidity and leverage position

Management Commentary
“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,” said Owen Kratz, Helix’s President and Chief Executive Officer. “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. We also see possibilities to expand our opportunities within our existing late-life production business. We are thrilled at the prospect of adding Alliance to the Helix family, and we believe this acquisition is a meaningful step in Helix’s responsible participation in this age of Energy Transition.”

“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. “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.”

Transaction Details
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.

The acquisition is expected to close mid-2022 and is subject to regulatory approvals and other customary conditions. There is no guarantee that the transaction will be consummated on the terms or timeframe currently contemplated, or at all.


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