Oceaneering International, Inc. announced that its wholly owned Norwegian subsidiary, Oceaneering AS, has entered into a definitive agreement to acquire AGR Field Operations (AGR FO) from AGR Group ASA and FieldCo Invest AS. AGR FO, headquartered in Bergen, Norway, is a provider of inspection, maintenance, subsea engineering, and field operations services, principally to the oil and gas industry.
The acquisition price is expected to be approximately $240 million, or 1.365 billion Norwegian Kroner, including acquired debt. The transaction is anticipated to close by the end of 2011, subject to approval by the Norwegian Competition Authority, which is expected. Oceaneering intends to fund the acquisition with cash and debt from its revolving credit facility.
Oceaneering believes AGR FO is Norway's largest asset integrity management service provider on pipelines, offshore production platforms, and onshore facilities. AGR FO has developed subsea technology to perform internal and external inspections of flexible and rigid flowlines and risers. This includes an ROV-deployed deepwater ultrasonic piping inspection tool.
AGR FO also has a substantial operating presence in Australia, with offices in Melbourne, Brisbane, and Perth from which it operates and maintains offshore and onshore oil and gas production facilities. Additionally, the company provides subsea engineering services and operates an offshore logistics supply base in Darwin.
The transaction is anticipated to be completed by the end of 2011, and for 2012 Oceaneering expects the acquisition to add approximately $10 million of net income. The newly acquired operations should generate about $200 million in revenue and $20 million of operating income in 2012, after roughly $5 million of depreciation and amortization expense. Oceaneering also expects to incur around $2 million of transaction costs associated with this acquisition in 2011.
M. Kevin McEvoy, President and Chief Executive Officer, stated: "We are pleased to have entered into an agreement to acquire AGR FO. As a result of this pending acquisition, we are increasing our estimate of Oceaneering's 2012 EPS to a range of $2.45 to $2.65 from $2.35 to $2.55.
"AGR FO will significantly increase our Inspection business, particularly in Norway, and provide us subsea inspection tooling to offer in other geographic markets in the future. AGR FO's Australian operations will be reported in our Subsea Projects segment.
"AGR FO employs over 800 personnel worldwide, and we are looking forward to the contribution they will make to our operations and growth. We are expecting business synergies to develop as we integrate AGR FO's operations into Oceaneering."