Aker Solutions has agreed to acquire NPS Energy, which is part of oilfield services company National Petroleum Services. NPS Energy has a strong presence in the Middle East and North Africa, which combined hold approximately 60 per cent of the world's proven oil and gas reserves.

"After the divestment of our non-oil and gas related business in 2010 and the demerger from the EPC contractor Kvaerner in 2011, this is our next major step in the transformation of Aker Solutions into a leading and global oilfield products, systems and services company", says Øyvind Eriksen, executive chairman of Aker Solutions.

"We have established a new operating structure, which more transparently shows our broad range of technologies and customer offerings, and we have introduced regional management in North America and Brazil, which provides our customers with a single point of contact. We are now ready to take this successful formula into a new region, and it is not just another region. It is the most prolific oil and gas region of the world," says Eriksen.

Headquartered in Dubai and with a strong local presence in the Middle East and North Africa, NPS Energy represents a platform from which Aker Solutions will be able to provide its broad portfolio of technology and services to the oil and gas industry in the region.

"In order to succeed in the region, we need a strong distribution platform and well established customer relationships managed by a management team with a proven track record. Basically, this is what we achieve by acquiring NPS Energy," says Øyvind Eriksen.

NPS Energy currently employs approximately 900 people. The company's core offerings are well intervention services - including coil tubing, wire-line services, cementing, pressure pumping, well logging and testing - and onshore drilling services. It also provides perforation equipment. NPS Energy's main markets are across the Middle East and North Africa.

Aker Solutions' presence and activities in the Middle East have primarily focused on well intervention services in the United Arab Emirates, Oman and Saudi Arabia. But the company has also executed numerous product and system contracts in the region, including drilling technologies, surface wellheads and process systems.

During the first quarter of 2012 alone, Aker Solutions has announced contracts in the Middle East and North Africa regions totalling almost NOK 600 million. This includes a contract for drilling equipment to be used in the Middle East as well as awards for surface wellhead equipment to Bahrain and Egypt.

"Despite these recent successes and the fact that we have technology and products in our portfolio which is highly relevant for oil and gas fields in the region, we have to admit that our success rate in recent tendering has been fairly low. With the added local presence and the NPS management's deeper understanding of the market in the region, we expect to be able to target opportunities with much greater precision in the future," Eriksen explains.

He predicts that the businesses which will benefit the most from the NPS Energy acquisition in the short to medium term include the process technology business, the surface wellhead and equipment business, drilling equipment and engineering. A new engineering office will be established in the United Arab Emirates to tie the entire Aker Solutions offering together in a whole.

Aker Solutions will pay an equity value of USD 350 million and assume approximately USD 110 million in net interest bearing debt at the time of closing, depending on the capital expenditure in 2012. The purchase price is a fixed equity value based on NPS Energy's 31 March 2011 balance sheet.

In 2011, NPS Energy had revenues of approximately USD 116 million. Revenues have on average grown approximately 16 per cent annually since 2006. For 2012, management forecasts operating revenues around USD 150 million and EBITDA around USD 48 million.

"When NPS Energy becomes Aker Solutions and starts to market and sell the broader portfolio of our products, systems and services in this region, we expect that the growth will continue at an even higher rate," says Eriksen.

NPS Energy is headed by Adnan Ghabris who has more than 23 years' international experience in the oil and gas industry. He will remain in this function and also assume the role of Aker Solutions' regional president for the Middle East and North Africa region, reporting directly to executive chairman Øyvind Eriksen. In his role as regional president for Aker Solutions, Mr Ghabris will develop a common Aker Solutions strategy and co-ordinate customer approach and expansion in the region.

"Our intention is to continue to grow the NPS Energy business while utilising our strong position to spearhead market entry for several other of Aker Solutions' product and service lines," says Mr Ghabris.

"Today we have a strong position within well intervention services in the Middle East and North Africa region. We aim to strengthen this further by introducing Aker Solutions' technologies, such as wire-line tractors and down-hole tools, to our existing customers. There is also a significant potential in introducing Aker Solutions' process systems, surface wellheads and drilling technologies, to name a few, into this region. I look forward to making that happen," adds Mr Ghabris.

Aker Solutions has access to the necessary funding, and the transaction is expected to be completed by the end of this year or early next year.

NPS Energy reported revenues of USD 116.1 million and EBITDA of USD 40.2 million for 2011. In 2010, revenues were USD 96.5 million and EBITDA was USD 26.6 million. The company reported net interest bearing debt of USD 114.1 million in Q4 2011.

Aker Solutions provides oilfield products, systems and services for customers in the oil and gas industry world-wide. The company brings together engineering and technologies for oil and gas drilling, field development and production. It employs approximately 23 500 people in more than 30 countries. In 2011 Aker Solutions had aggregated annual revenues of approximately NOK 36.5 billion (USD 6.5 billion). The company is listed on the Oslo Stock Exchange.

His Royal Highness the Sultan of Johor, Sultan Ibrahim Ibni Almarhum Sultan Iskandar, today launched Malaysia’s largest refinery and petrochemical venture, the PETRONAS Refinery and Petrochemical Integrated Development (RAPID) project, which has the potential of turning Southern Johor into a new petroleum and petrochemical hub in the country.

The launch marked an important milestone for the development of the RM60-billion project which will pave the way for PETRONAS to further grow and add value to Malaysia’s oil, gas and petrochemical industry and spur domestic and foreign direct investments in the country.

Held near RAPID’s proposed project site in Pengerang, Johor, the launch was also graced by the presence of Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak, Johor Menteri Besar Dato’ Abdul Ghani Othman and PETRONAS’ President and Chief Executive Officer Dato’ Shamsul Azhar Abbas.

With a capacity to refine 300,000 barrels per day of imported crude oil, RAPID’s proposed refinery will act as the backbone of the project that will supply feedstock for the petrochemical complex. It will also produce a host of refined petroleum products, including gasoline and diesel that meet the Euro 4 and Euro 5 fuel specifications.

The petrochemical component of the project will allow PETRONAS to expand its products portfolio from commodity petrochemicals to premium differentiated and specialty chemicals, capitalising on the growing demand for these higher value products in the Asia Pacific region.

To support the development of RAPID, PETRONAS is also assessing the feasibility of developing a new liquefied natural gas (LNG) receiving and re-gasification terminal and a co-generation power plant.

Like other PETRONAS’ projects, RAPID will be developed and implemented according to stringent international regulatory standards, as well as Malaysia’s Department of Environment (DOE) and Department of Occupational Safety and Health (DOSH) standards. It will also employ best-in-class technologies that have been adopted in advanced countries with stringent environmental regulations.

RAPID’s implementation is aligned with the Government’s strategies to establish new engines of growth for Malaysia and contributes towards raising incomes and improving the people’s quality of life.

The project, which is greater in scale and scope than that of PETRONAS’ Melaka, Kertih and Gebeng complexes combined, has the potential to create multiple economic spin-offs for the oil and gas industry, develop downstream manufacturing industries, spur township development and infrastructures as well as provide new employment opportunities in the country, especially in Pengerang.

Coupled with the existing oil, gas and petrochemical facilities in the country, RAPID also supports the Government’s aspiration to turn Malaysia into a leading petroleum industry hub in the region.

During its construction, the project is expected to require more than 40,000 contract-based workers. Upon completion, the project will offer about 4,000 new permanent employments for qualified Malaysians in the premium high-end technology value chain, creating a new generation of oil and petrochemical professionals.

PETRONAS has already started making preparations to ensure the availability of qualified and trained personnel to work at the various plants and facilities within the RAPID complex.

In addition, other long-term employment opportunities are expected to be created by service providers, suppliers, maintenance companies and related industries in the southern region to support the operation of the complex.

RAPID’s project implementation is expected to commence by mid 2013, after PETRONAS reaches its final investment decision (FID).