
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
Geothermal Player Ormat Adds Capacity as Power Demand Rises
2025-02-28 - Ormat aims to grow its installed capacity to between 2.6 and 2.8 gigawatts by the end of 2028, CEO says.
Baker Hughes CEO: Expect ‘Volatility, Noise’ Around Energy Transition
2025-03-12 - Baker Hughes and Linde executives spoke about lower carbon resources such as hydrogen and geothermal, which will be part of the energy mix but unlikely to displace natural gas.
Energy Transition in Motion (Week of Jan. 25, 2025)
2025-01-24 - Here is a look at some of this week’s renewable energy news, including a bright outlook for solar power capacity additions in the U.S.
E&Ps’ Subsurface Wizardry Transforming Geothermal, Lithium, Hydrogen
2025-02-12 - Exploration, drilling and other synergies have brought together the worlds of subsurface oil drilling and renewable energies.
Energy Transition in Motion (Week of March 14, 2025)
2025-03-14 - Here is a look at some of this week’s renewable energy news, including a record-breaking year for solar capacity additions.
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.