Ausenco Limited (ASX: AAX) today announced it had acquired Canadian oil sands business PROJEX Technologies to grow its Energy business and expand its offering in Canada’s oil sands market. Ausenco CEO, Zimi Meka, said the acquisition provided Ausenco with broader and complementary Engineering, Procurement and Construction Management service capabilities in Canada’s high growth oil sands industry and was part of the company’s strategy to significantly grow its Energy business. "We remain committed to growing our Energy revenues both organically and through further acquisitions that enhance our global solutions offering to our clients," he said. "The global energy market is significantly larger than the global minerals and metals market and we are focussed on capturing a far greater share of this market. "The acquisition of PROJEX strengthens our presence and expertise in the North American oil and gas market and complements our acquisition of Reaction Consulting in early 2012. "Canada’s oil sands contain the third largest proven reserves of crude oil in the world and Alberta’s Energy Resources Conservation Board (ERCB) has forecast production to more than double by 2022. The ERCB estimates that capital expenditure in 2012 in the Canadian oil sands market was $20.4 billion, which is expected to increase to $23.4 billion in 2015. "Ausenco has a strong competitive advantage, a full lifecycle service offering and a broad oil sands industry client base.
We can now service all phases of oil sands projects from Evaluate phase studies through to Create phase EPCM delivery. "PROJEX offers a complete suite of end-to-end engineering and development services, specifically tailored for in-situ oil sands recovery and heavy oil customers and has a successful track record in delivering projects of all sizes with specialist expertise in small to medium brownfield projects. "In-situ SAGD projects are the fastest growing method of oil sands production and this growth is driving demand for experienced mid-sized contractors who can deliver small to medium size projects." PROJEX has a strong order book, a solid pipeline of tender opportunities and operates with seven of the top oil sands producers in Canada. The acquisition price of $15.2 million represents a multiple of 2.9 times anticipated 2014 full year EBITDA of $5.2 million.
The acquisition will be immediately earnings per share accretive and synergies between PROJEX’s and Ausenco’s current businesses are expected to deliver significant operating cost savings. The acquisition, which is subject to a number of conditions precedent, is expected to be completed in late July 2013. Ausenco will fund the acquisition from available cash and facilities.