Archer has entered into an agreement to acquire Premium Oilfield Services, LLC (“Premium”), a well-established US well service provider within fishing and P&A related services. Premium has a first-class workforce with an excellent service reputation with major operators. Archer and Premium’s complimentary client base represents more than 80% of the estimated $15 billion spend in deepwater P&A and decommissioning in the Gulf of America up to 2040.   

The acquisition will enable meaningful direct cost and capex synergies. Most notably, Archer will acquire a broad portfolio of well-maintained fishing equipment with an estimated replacement value of $35-40 million, which will give material third party rental savings. 

Total consideration for the acquisition is $20 million, which will be financed through a contemplated private placement. The acquisition is expected to close shortly after completion of the contemplated private placement. Completion of the transaction is subject to customary closing conditions, including a financing condition.

Highly accretive

The acquisition is highly accretive with payback of around 2 years, and proforma EV/EBITDA of around 2.5x including synergies. The transaction is estimated to improve Archer’s annual EBITDA by about 5% and the annual cash contribution by 8-10% (pro-forma, post synergies).  Further, it will strengthen Archer’s foundation for increased shareholder returns and continued deleveraging, in line with our capital allocation strategy. 

M&A track record

The acquisition adds to Archer’s established M&A track record. Since the start of 2023, Archer has invested ~$90 million in accretive bolt-on M&A transactions, and the acquired companies have delivered around $30 million in EBITDA over the last 12 months (pro-forma), implying a multiple of ~3x EV/EBITDA. Archer will continue to look for accretive and synergetic bolt-on acquisition targets.

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