CALGARY, Aug. 12, 2014 /CNW/ - SECURE Energy Services Inc. ("Secure" or the "Corporation") (TSX:SES) is pleased to announce that it has entered into an agreement to acquire all of the assets of Predator Midstream Ltd. ("Predator") for an aggregate purchase price of approximately $107 million, subject to certain customary closing conditions.
Summary of the Acquisition
Predator is a privately owned company headquartered in Calgary, Alberta. Predator owns and operates three existing transloading rail terminals located in Alberta at Mannville, Alliance and High Prairie. Predator transloads crude oil from truck to rail and has the ability to offer the customer access to its current fleet of 275 rail cars. Predator has well established relationships with both producers and refiners which have contributed to its successful growth as it provides Canadian oil producers access to high value markets.
Predator's management team has demonstrated the ability to execute on capital projects and has earned a reputation as a leader in moving crude by rail for Canadian oil producers. The Predator management team is led by CEO and founder, Joel MacLeod. Mr. MacLeod, along with his management and operational team will continue to operate the day-to-day business.
Total consideration for the Predator acquisition is $107 million, subject to certain closing adjustments. The purchase price is being paid with $65 million in cash and the balance of $42 million through the issuance of common shares of SECURE. Closing is expected to occur on or about August 15, 2014.
The expected range for Predator's contribution to consolidated EBITDA, adjusted for an August 15, 2014 closing date, for the remainder of 2014 is anticipated to be in the range of approximately $5 to $7 million. The expected 2015 annualized run rate EBITDA is anticipated to be in the range of approximately $17 to $20 million reflecting full year utilization of assets put into operations during 2014.
The strategic acquisition of Predator further strengthens SECURE's midstream infrastructure by offering SECURE customer's enhanced market access at the field level and to downstream markets.Transporting crude oil by rail continues to become more prevalent with many crude oil producers due to pipeline constraints. The addition of Predator's three transloading terminals to SECURE's Full Service Rail ("FSR") offering provides an immediate rail facility network that complements SECURE's pipeline connected Full Service Terminals ("FST"). In addition to their existing transloading terminals, Predator has numerous midstream projects in various stages of development that are in alignment with SECURE's midstream growth strategy.
We are pleased to welcome Predator's experienced management and operational staff to Secure. "The acquisition of Predator is an exciting addition that complement's Secure's existing midstream infrastructure" states Rene Amirault, Chairman, President and Chief Executive Officer of Secure. "This acquisition further enhances our service offering allowing our customers to access an expanded network of facilities. With continued restrictions on available pipeline access, Predator and Secure are aligned that it is imperative we provide our customers with the most efficient, safe and cost effective solution to moving their crude oil to market."
"The entire Predator Team is excited to become an integral part of Secure where there will be both immediate and long term synergies for the combined entity. We plan to continue to aggressively develop and expand market access for producers and refiners through our rail network" states Joel Macleod, President and Chief Executive Officer of Predator.
About SECURE Energy Services Inc.
SECURE is a TSX publicly traded energy services company that focuses on providing specialized services to upstream oil and natural gas companies.
The Corporation operates three divisions:
Processing, Recovery and Disposal Division ("PRD"): The PRD division owns and operates midstream infrastructure that provides processing, storing, shipping and marketing of crude oil, oilfield waste disposal and recycling. Specifically these services are clean oil terminalling and rail transloading, custom treating of crude oil, crude oil marketing, produced and waste water disposal, oilfield waste processing, landfill disposal, and oil purchase/resale service. Secure currently operates a network of facilities throughout western Canada and in North Dakota, providing these services at its full service terminals, landfills and stand-alone water disposal facilities.
Drilling Services Division ("DS"): The DS division provides equipment and chemicals for building, maintaining, processing and recycling of drilling and completion fluids. The drilling fluids service line comprises the majority of the revenue for the division which includes the design and implementation of drilling fluid systems for producers drilling for oil, bitumen and natural gas. The DS division focuses on providing products and systems that are designed for more complex wells, such as medium to deep wells, horizontal wells and horizontal wells drilled into the oil sands.
OnSite Division ("OS"): The operations of the OS division include environmental services which provide pre-drilling assessment planning, drilling waste management, remediation and reclamation assessment services, laboratory services, and "CleanSite" waste container services; integrated fluid solutions which include water management, recycling, pumping and storage solutions; and projects which include pipeline integrity (inspection, excavation, repair, replacement and rehabilitation); demolition and decommissioning and reclamation and remediation of former wellsites, facilities, commercial and industrial properties.
Forward Looking Statements
Certain statements contained in this document constitute "forward-looking statements" and/or "forward-looking information" and/or "financial outlooks" within the meaning of applicable securities laws (collectively referred to as forward-looking statements). When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions, as they relate to Secure, or its management, are intended to identify forward - looking statements. Such statements reflect the current views of Secure with respect to future events and operating performance and speak only as of the date of this document. Forward-looking statements included or implied in this news release may include, but are not limited to: the acquisition of the assets of Predator by SECURE; the anticipated closing date; EBITDA of Predator; EBITDA contribution of the Predator assets to SECURE; general market conditions; the oil and natural gas industry; activity levels in the oil and gas sector, including market fundamentals and drilling levels; demand for the Corporation's services; expansion strategy; completion of facilities; the impact of new facilities on the Corporation's financial and operational performance; and acquisition strategy.
Forward-looking statements concerning expected operating and economic conditions are based upon estimated results as well as the assumption that increases in market activity and growth will be consistent with industry activity in Canada, and the United States, and growth levels in similar phases of previous economic cycles.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements, including but not limited to those factors referred to and under the heading "Business Risks" in SECURE's Management's Discussion and Analysis for the three months ended March 31, 2014 and under the heading "Risk Factors" in the Corporation's annual information form ("AIF") for the year ended December 31, 2013 and also includes the risks associated with the possible failure to realized the anticipated synergies in integrating the operations of Predator with the operations of SECURE. Any "financial outlook" in this press release, as defined by applicable securities legislation, has been approved by management of SECURE and is included for the purpose of illustrating the materiality of the acquisition of the assets of Predator, and for no other purpose. Although forward-looking statements contained in this document are based upon what the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements in this document are expressly qualified by this cautionary statement. Unless otherwise required by law, Secure does not intend, or assume any obligation, to update these forward-looking statements.
Non GAAP Measures
The Corporation uses accounting principles that are generally accepted in Canada (the issuer's "GAAP"), which includes, International Financial Reporting Standards ("IFRS"). In addition, this press release refers to the Non-GAAP financial measure EBITDA in respect of Predator. EBITDA is not a recognized measure under IFRS and does not have any standardized meaning prescribed by IFRS. EBITDA as used by the Corporation may not be comparable to similar measures presented by other reporting issuers. See the management's discussion and analysis available atwww.sedar.com for a reconciliation of historical EBITDA of the Corporation to the equivalent IFRS measure, which is illustrative of the determination of EBITDA in respect to Predator. Management believes that in addition to net earnings, EBITDA is a useful supplemental measure as it provides an indication of the results generated by the principal business activities of Predator prior to consideration of how those activities are financed or how the results are taxed. EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.