HUNTING ACQUIRES RTI ENERGY SYSTEMS
Hunting PLC the international energy services group, announces the completion of the acquisition of the business and assets of RTI Energy Systems Inc. (RTIES) for a total cash consideration of US$12.5m. The consideration payable has been funded from Hunting’s existing cash resources.
RTIES is a leading manufacturer of production riser technologies for deep water applications within the offshore oil and gas industry. RTIES’s product portfolio incorporates proprietary technology and know-how which is protected by a number of patents. RTIES is unique within the industry as the only supplier of titanium stress joints, providing a more reliable, compact and lower total cost alternative to flexible joints and steel tapered stress joints. RTIES’s customer base includes major exploration and production groups and primary suppliers to the industry. In addition to these product lines, RTIES generates revenue from the fabrication and precision machining of components used in the oil and gas industry, as well as providing inspection and maintenance services for customers. RTIES has historically focused its business on the Gulf of Mexico with its products being used in many deep water and ultra-deep water projects in the region. RTIES is an operating subsidiary of Arconic, Inc., a global leader in lightweight metals engineering and manufacturing based in the US.
RTIES operates from a single site facility in Houston, Texas, US, with 87,000 square feet of covered operating floor space, and currently employs 21 personnel. It is anticipated that key members of the senior management team will continue with Hunting.
RTIES is currently loss making as the global offshore drilling market continues its recovery and return to growth. However, given RTIES’s product portfolio and market position management are optimistic of securing market opportunities to deliver returns going forward. Hunting’s valuation of the balance sheet of RTIES has net assets of approximately $13.0m which underpins the consideration being paid. Based on US GAAP management accounts, for the year ended 31 December 2018, RTIES recorded revenues of $7.1m which generated an operating loss. Historically RTIES has generated profits at good margins and in 2014 and 2013, RTIES recorded revenues of $49.2m and $85.5m respectively.
Commenting on the acquisition, Jim Johnson, Chief Executive said:
“Given the new offshore deep water projects being commissioned within the US, Brazil and Guyana, RTIES, which will sit alongside and complement our Subsea operations, will provide Hunting with an enlarged product offering into the recovering deep water offshore market. The transaction also delivers on our stated strategic goal of targeting investments in differentiated technologies to enhance our value proposition for the offshore oil and gas industry.”