The sale of its oil and gas business to Blue Water Energy-backed Kentech will allow SNC-Lavalin to focus on its high-performing engineering services. (Source: Kentech Corporate Holdings Ltd.)
SNC-Lavalin Group Inc. said on Feb. 9 it would sell its underperforming oil and gas business to an energy services company backed by private equity firm Blue Water Energy LLP, sending the Canadian group’s shares up more than 8% in early trade.
The sale to Kentech Corporate Holdings Ltd. will allow SNC-Lavalin to focus on its high-performing engineering services.
The Montreal-based construction and engineering company had announced restructuring actions in July 2019, including plans to exit fixed-price contracts to reduce its risk profile.
“Our priority is absolutely in the growth of the engineering services business, so to get this fully transitioned to being a leading professional services and project management company,” SNC-Lavalin CEO Ian Edwards told analysts.
Exiting oil and gas fixed-price contracts would further reduce the company's business risk, he said.
While the deal is expected to close in the second quarter of 2021, Montreal-based SNC-Lavalin expects a fair value write-down in the range of $260 million to $295 million, almost entirely non-cash in nature, in the fourth quarter of 2020.
The company said in a statement its resources unit would mainly comprise service projects in the mining and metallurgy division.
Kentech expects the deal to accelerate its revenue growth to $1 billion on a pro forma basis by the end of 2021.
SNC stock rose 8.25% to C$24.67 a share in Toronto trading.
Recommended Reading
Glenfarne Signs on to Develop Alaska LNG Project
2025-01-09 - Glenfarne has signed a deal with a state-owned Alaskan corporation to develop a natural gas pipeline and facilities for export and utility purposes.
Bracewell: Many Await Updates to Existing CO2 Pipeline Safety Regulations
2025-01-15 - Pipeline proponents are facing challenges and have been hampered by the lack of clarity regarding CO2 pipeline safety regulations.
Williams’ CEO: Pipeline Permitting Costs Twice as Much as Steel
2025-03-12 - Williams Cos. CEO Alan Armstrong said U.S. states with friendlier permitting polices, including Texas, Louisiana and Wyoming, have a major advantage as AI infrastructure develops.
Targa Buys Back Bakken Assets After Strong 2024
2025-02-20 - Targa Resources Corp. is repurchasing its interest in Targa Badlands LLC for $1.8 billion and announced three new projects to expand its NGL system during its fourth-quarter earnings call.
Colonial Shuts Pipeline Due to Potential Gasoline Leak
2025-01-14 - Colonial Pipeline, the largest refined products pipeline operator in the United States, said on Jan. 14 it was responding to a report of a potential gasoline leak in Paulding County, Georgia and that one of its mainlines was temporarily shut down.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.