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
Shale Outlook Eagle Ford: Sustaining the Long Plateau in South Texas
2025-01-08 - The Eagle Ford lacks the growth profile of the Permian Basin, but thoughtful M&A and refrac projects are extending operator inventories.
SM’s First 18 Uinta Wells Outproducing Industry-Wide Midland, South Texas Results
2025-02-20 - Shallow tests came on with 685 boe/d, 95% oil, while deeper new wells averaged 1,366 boe/d, 92% oil, from two-mile laterals, SM Energy reported.
DOE Awards Pioneer Energy $27MM for Emissions Reduction Projects
2025-01-08 - Pioneer Energy said it will allocate most of the funds toward advancing its Emission Control Treater, a near zero emissions well pad production technology, as it implements projects in the Eagle Ford, Cotton Valley and Colorado.
Permian to Drive Output Growth as Other Basins Flatten, Decline–EIA
2025-01-14 - Lower 48 oil production from outside the Permian Basin—namely, the Bakken and Eagle Ford shales—is expected to flatten and decline in coming years, per new EIA forecasts.
Aethon Dishes on Western Haynesville Costs as Gas Output Roars On
2025-01-22 - Aethon Energy’s western Haynesville gas wells produced nearly 34 Bcf in the first 11 months of 2024, according to the latest Texas Railroad Commission data.
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.