/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
Unless otherwise indicated all financial figures are in Canadian dollars
CALGARY, Oct. 11, 2012 /CNW/ - Gibson Energy Inc. ("Gibson"), (TSX:GEI),
is pleased to announce that it has entered into a definitive agreement
(the "Agreement") for the acquisition of all of the issued and
outstanding common stock of the parent holding company of OMNI Energy
Services Corp. ("OMNI") for US$445 million (the "Acquisition"). The
purchase price assumes that OMNI will have working capital of US$43.5
million, no debt and no cash at closing. OMNI is a privately held
provider of environmental and production services to the oil and gas
industry and is based in Carencro, Louisiana. OMNI has a strong
competitive position in most major oil and liquids focused areas in the
United States (including, but not limited to, the U.S. Bakken, Granite
Wash, Eagle Ford, Tuscaloosa Marine, Mississippi Lime and the Gulf of
Mexico) with a significant focus on environmental and
production-related activities. OMNI adds 1,091 employees to the Gibson
team, including strong management and operations groups.
Gibson is also pleased to announce that it intends to increase its
quarterly dividend rate to $0.26 per common share upon the close of the
Acquisition, representing a 4% increase from the prior quarterly rate
and resulting in a new annualized dividend of $1.04.
In connection with the Acquisition, Gibson has agreed to sell, on a
bought deal basis, an aggregate of 15,840,000 subscription receipts at
a price of $22.10 per subscription receipt for gross proceeds of
approximately $350 million (approximately $403 million if the 15
percent over-allotment option is exercised in full). The subscription
receipts will be offered through a syndicate of investment dealers
co-led by BMO Capital Markets and RBC Capital Markets, with BMO Capital
Markets acting as sole bookrunner.
"Gibson's business strategy is to leverage and expand our integrated
asset base and partner with high quality customers to capture synergies
while providing shareholders with strong growth along with a stable and
growing dividend. This acquisition, along with the recently announced
Hardisty Terminal expansion, allows us to continue the realization of
those strategic goals." said Stewart Hanlon, President and Chief
Executive Officer of Gibson. "OMNI broadens Gibson's footprint in most
of the major U.S. liquids focused basins, provides the scale we believe
is required to grow the environmental services business in North
America, expands upon the Palko Environmental Ltd. acquisition in
December of 2011 and adds new customers in the U.S. to whom we can
promote the rest of the Gibson product suite. We are witnessing first
hand, industry trends including increasing water-based horizontal well
fracs, higher residual water production and increased environmental and
regulatory scrutiny and are extremely excited about the opportunities
the OMNI acquisition affords in light of these trends. OMNI comes with
a strong management team, a significant growth profile and a
substantial opportunity to expand the current Gibson suite of offerings
to new geographies as well as to OMNI's current customers."
OMNI is expected to generate approximately US$80 to US$82 million in pro
forma adjusted EBITDA in 2012. Accordingly, if the Acquisition had
occurred at the beginning of 2012, it would have been accretive to
budgeted distributable cash flow per common share by approximately 18
percent in 2012.
"As we increasingly diversify our service offering, we strengthen our
confidence in the growth and stability of Gibson's operating cash flows
across various commodity cycles. This increased confidence is
reflected in today's 4% increase to the dividend." said Don Fowlis,
Gibson's Chief Financial Officer. "The $350 million subscription
receipt offering announced today, along with cash on our balance sheet
and capacity under our revolving credit facility, provides financing
certainty for this acquisition. We remain committed to a strong balance
sheet. This strong balance sheet is expected to provide us with the
financial flexibility to fund our recently announced Hardisty Terminal
expansion, as well as other growth opportunities across our
businesses."
Investment Highlights
Expansion of the complementary environmental services and fluid handling
business
-
The Acquisition fits within Gibson's current strategy of expanding its
integrated asset base to provide synergistic offerings to customers and
builds upon the Palko Environmental Ltd. acquisition in December 2011,
while providing the scale to expand its environmental services and
fluid handling business (including water treatment) into the U.S.
market.
-
The Acquisition provides an avenue by which to benefit from current
industry trends such as increased environmental and regulatory
scrutiny, increased fluids production and services intensity associated
with more complex multi-stage, water-based frac horizontal drilling and
increased production and drilling for oil and liquids.
-
Due to the integrated nature of the Gibson business model, the addition
of OMNI has the potential to drive additional benefits for Gibson's
Truck Transportation, Terminals & Pipelines and Marketing segments as
OMNI related fluids could be trucked through existing Gibson
infrastructure and potentially injected into one of Gibson's existing
pipeline injection stations in the U.S.
Expands upon a solid footprint in the U.S. with exposure to key U.S.
hydrocarbon basins
-
The Acquisition provides a sizable footprint and scale to continue
building momentum in the U.S., a market with approximately three times
more oil and gas production than the Canadian market.
-
The Acquisition provides increased scale in key U.S. oil and liquids
rich basins such as the U.S. Bakken, Granite Wash, Eagle Ford,
Tuscaloosa Marine and Mississippi Lime and introduces a new geographic
platform in the offshore Gulf of Mexico.
-
The addition of OMNI expands Gibson's U.S. customer base significantly
beyond its current relationships, adding names such as Anadarko
Petroleum Corporation, Exxon Mobil Corporation, Petrohawk Energy
Corporation, EOG Resources, Inc. and others.
-
Historically, Gibson's U.S. presence has been focused on oil hauling,
injection stations and marketing. The Acquisition will provide the
Company with multiple service offerings in the U.S. and a platform to
help facilitate further expansion.
Synergistic fit with existing Gibson businesses providing a platform for
growth
-
The geographic footprint of the OMNI platform is very complementary with
Gibson's existing business in the U.S.
-
The Acquisition will provide opportunities to leverage OMNI's solid U.S.
relationships and multi-product sales force to promote the current
Gibson suite of services to existing OMNI customers in the U.S. and
vice versa.
-
The increased U.S. footprint and nature of the OMNI service offering
should provide significant market intelligence and a first mover
advantage into all of the latest plays, helping Gibson establish a
presence for its entire platform.
Demonstrated historical growth and strong platform for future growth
focused on environmental services and fluid handling
-
Based on expected pro forma adjusted EBITDA for 2012, OMNI has
demonstrated a historical compound annual growth rate of approximately
30% since 2010, achieved with a constrained balance sheet and limited
access to external capital.
-
Gibson's greater access to capital should provide increased growth by
unlocking available expansion opportunities that could not be
undertaken by OMNI under historical financial constraints.
-
The majority of currently planned OMNI capital expenditures are focused
on environmental services and fluid handling.
-
The fragmented U.S. environmental services market provides a sizeable
opportunity for consolidation through which to add both complementary
services and new geographies.
-
OMNI's proprietary technology suite provides a significant opportunity
to expand the current OMNI service offerings into Canada including,
potentially, the high growth oil sands sector.
Significantly positive financial impact
-
OMNI is expected to generate approximately US$80 to US$82 million in pro
forma adjusted EBITDA in 2012. Accordingly, if the Acquisition had
occurred at the beginning of 2012, it would have been accretive to
budgeted distributable cash flow per common share by approximately 18
percent in 2012.
-
The addition of OMNI's logistics-intensive, capital-light business
should result in Gibson's dividend payout as a percentage of
distributable cash, inclusive of the dividend increase, to decrease
from current levels.
Increase to Dividend
Following the successful completion of the proposed Acquisition, Gibson
intends to increase its quarterly dividend rate from $0.25 per common
share per quarter (or $1.00 annualized) to $0.26 per common share per
quarter (or $1.04 annualized) representing a 4.0% increase. This
increase reflects management's confidence in the significant
operational and financial strength of Gibson as well as cash flow
stability across various commodity cycles going forward.
Transaction Closing
The proposed Acquisition is subject to customary approvals including
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. Both the Board of Directors of Gibson and of
OMNI have approved the transaction. Closing is expected to occur on or
about October 31, 2012.
Subscription Receipt Offering
Gibson has agreed to sell, on a bought deal basis, an aggregate of
15,840,000 subscription receipts at a price of $22.10 per subscription
receipt for gross proceeds of approximately $350 million. The
subscription receipts will be offered through a syndicate of investment
dealers co-led by BMO Capital Markets and RBC Capital Markets, with BMO
Capital Markets acting as sole bookrunner. Gibson has also granted the
underwriters an option to purchase, in whole or part, up to an
additional 2,376,000 subscription receipts for a price of $22.10 per
subscription receipt to cover over-allotments, if any, until 30 days
following the closing of the offering. If the over-allotment option is
exercised in full, gross proceeds from the offering will be
approximately $403 million. Each subscription receipt will entitle the
holder thereof to receive, without payment of additional consideration
or further action, upon closing of the Acquisition and upon
satisfaction of certain escrow release conditions, one common share of
Gibson plus an amount equal to the dividends Gibson declares on the
common shares, if any, for record dates which occur during the period
from and including the closing date of the offering to, but not
including, the date of issuance of the common shares issuable on the
deemed exercise of the subscription receipts, net of any applicable
withholding taxes.
The net proceeds from the sale of the subscription receipts will be held
by an escrow agent pending receipt of all approvals required to
finalize the Acquisition and fulfillment or waiver of all other
outstanding conditions precedent to closing the Acquisition. In the
event such approvals and conditions are not satisfied prior to January
31, 2013 or if the Agreement is terminated prior to such time, or
Gibson advises the underwriters or discloses to the public that it does
not intend to proceed with the Acquisition of OMNI, the holders of the
subscription receipts will be entitled to receive an amount equal to
the full subscription price thereof plus their pro rata share of the
interest earned on the escrowed funds, net of any applicable
withholding taxes.
The subscription receipts will be offered in all provinces and
territories of Canada by way of a short form prospectus. The offering
is subject to the receipt of all necessary regulatory and stock
exchange approvals. Closing of the offering is expected to occur on or
about October 29, 2012.
Neither the subscription receipts nor the common shares have been nor
will be registered under the United States Securities Act of 1933, as
amended (the "Securities Act") and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements of the Securities Act and applicable state
securities laws. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale
of the securities in the United States or any jurisdiction in which
such offer, solicitation or sale would be unlawful.
Description of OMNI
OMNI is based in Carencro, Louisiana, and provides environmental and
production services to the oil and gas industry in the U.S. The
company is a privately held portfolio company of an affiliate of
Wellspring Capital Management, LLC. OMNI has a strong competitive
position in most major oil and liquids focused areas in the U.S.,
including the U.S. Bakken, Granite Wash, Eagle Ford, Tuscaloosa Marine,
Mississippi Lime and the Gulf of Mexico, with a significant focus on
environmental services, production related business, and oil and
liquids based activity. OMNI's core environmental services and fluid
handling and production services businesses comprise approximately 74%
of OMNI's 2012 estimated pro forma adjusted EBITDA before corporate
expenses. These core businesses are focused on increasingly complex
and non-discretionary compliance, maintenance and safety needs of
exploration and production companies.
Environmental Services and Fluid Handling
OMNI provides a broad range of environmental services and fluid handling
packages to meet the needs of its customers both onshore in key oil and
liquids rich basins and offshore in the Gulf of Mexico. OMNI's
environmental services portfolio includes:
-
Transportation, disposal and processing of drilling and production waste
such as fluids and cuttings.
-
Comprehensive fluid service packages, including drilling support
packages (from supply, transport and handling equipment to removal), as
well as cleaning packages (supply, training and support of custom fluid
vacuum units).
OMNI's environmental services are typically non-deferrable with a
mandated frequency of service and carry with them significant
regulatory barriers and permitting costs. As a result, OMNI generates
high margins and significant repeat business with its largest customers
who value the efficiency, reliability and safety that OMNI provides.
Importantly, OMNI offers these services both individually and as a
complete turn-key package that increases uptime and reduces complexity
for its customers.
Production Services
OMNI's production services business provides exploration and production
companies with critical services that ensure uptime and consistent
operation of producing wells. Specialized services range from the
inspection and repair of above-ground well-pumping units to the
pressure and temperature testing of producing wells. OMNI maintains a
strong position in the U.S. Bakken and has the flexibility to migrate
services to other basins. The production services OMNI provides are a
natural extension of its environmental fluid transport and disposal
well service lines, which target both drilling and production related
activities.
Complementary Businesses
OMNI also provides a range of exploration support services, including
exploratory drilling services offered individually or as a bundled,
outsourced project management package. OMNI also offers an
accommodations business in the U.S. Bakken which is very complementary
to OMNI's production services business.
A PDF location map showing the location of the Gibson and OMNI sites is
available at:
http://files.newswire.ca/1137/GibsonsOmni.pdf
Advisors
BMO Capital Markets is acting as exclusive financial advisor with
respect to the Acquisition. BMO Capital Markets has advised Gibson's
Board of Directors that it is of the opinion that, as of the date
hereof, the consideration offered for OMNI pursuant to the transaction
is fair from a financial point of view, to Gibson. Bennett Jones LLP
is acting as Canadian legal advisor and Latham & Watkins LLP is acting
as U.S. legal advisor to Gibson with respect to the Acquisition.
Conference Call Advisory
Gibson will host a conference call to discuss the Acquisition today at
2:00 p.m. MT (4:00 p.m. ET). A presentation will be available prior to
the conference call at http://www.gibsons.com.
The conference call dial-in numbers are:
-
Local (Toronto): 416-641-6150
-
Toll free from Canada and the U.S: 800-952-5114
-
International (anyone dialing in from Europe should dial '00' first):
800-6578-9818
-
Participant Pass Code: 6175479#
The call will also be recorded for playback and available until October
26, 2012, using the following dial in process:
-
905-694-9451 or 800-408-3053
-
Pass code: 6667653#
About Gibson
Gibson is one of the largest independent midstream energy companies in
Canada and a major participant in the crude oil transportation business
in the United States, and is engaged in the movement, storage,
blending, processing, marketing and distribution of crude oil,
condensate, natural gas liquids, and refined products. Gibson
transports hydrocarbons by utilizing its integrated network of
terminals, pipelines, storage tanks, and truck fleet located throughout
western Canada and the United States. Gibson is also involved in the
processing, blending and marketing of hydrocarbons, provision of water
disposal and oilfield waste management services and is the second
largest retail propane distribution company in Canada.
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking information and statements (collectively,
"forward-looking statements") including, but not limited to, business
objectives, expected growth, results of operations, performance, the
increase to the dividend, business projects and opportunities and
financial results and specifically the offering of the subscription
receipts, including the use of proceeds and anticipated closing
thereof, the acquisition of OMNI, including the expected closing date
thereof, the aggregate cash consideration payable in connection
therewith and the anticipated sources of funding thereof, the
anticipated benefits of the acquisition of OMNI, the expected returns
and contributions to cash flow and pro forma adjusted EBITDA therefrom,
the expected impact of the OMNI acquisition on Gibson's dividend payout
as a percentage of distributable cash flow, OMNI's estimated pro forma
adjusted EBITDA compound annual growth rate from 2010 to 2012E, the
amount of estimated 2012 pro forma adjusted EBITDA of OMNI attributable
to OMNI's core environmental services and fluid handling and production
services business and the anticipated indebtedness to be incurred under
the credit facility in connection with the acquisition. These
statements relate to future events or Gibson's future performance. All
statements other than statements of historical fact are forward-looking
statements. The use of any of the words ''anticipate'', ''plan'',
''contemplate'', ''continue'', ''estimate'', ''expect'', ''intend'',
''propose'', ''might'', ''may'', ''will'', ''shall'', ''project'',
''should'', ''could'', ''would'', ''believe'', ''predict'',
''forecast'', ''pursue'', ''potential'' and ''capable'' and similar
expressions are intended to identify forward-looking statements. These
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ materially
from those anticipated in such forward-looking statements. Although
Gibson believes these statements to be reasonable, no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this press release should not be
unduly relied upon. Gibson's actual results could differ materially
from those anticipated in these forward-looking statements as a result
of regulatory decisions, competitive factors in the industries in which
Gibson operates, prevailing economic conditions and other factors,
including those listed above, many of which are beyond the control of
Gibson. The forward-looking statements contained in this press release
represent Gibson's expectations as of the date hereof, and are subject
to change after such date. Gibson disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as may be
required by applicable securities regulations.
Financial outlook information contained in this press release about
prospective results of operations, including estimated 2012 pro forma
adjusted EBITDA and estimates related thereto, financial position or
distributable cash flow is based on assumptions about future events,
including economic conditions and proposed courses of action, based on
management's assessment of the relevant information currently
available. Readers are cautioned that such financial outlook
information contained in this press release should not be used for the
purposes other than for which it is disclosed herein.
This press release contains references to pro forma adjusted EBITDA and
distributable cash flow, all of which are financial measures that are
not recognized under International Financial Reporting Standards
("IFRS") or United States generally accepted accounting principles ("US
GAAP") and do not have a standardized meaning under IFRS or US GAAP.
These measures provide additional information that management believes
is meaningful regarding OMNI's operational performance. Pro forma
adjusted EBITDA as it is used in relation to OMNI consists of
consolidated net income before interest expense, income taxes,
depreciation, amortization, stock based compensation expense,
impairment, management fees and adjustments that are considered
non-recurring in nature including the pro forma effect of acquisitions
by OMNI that took place in the period referenced as if the acquisitions
by OMNI took place at the beginning of the period in which such
acquisitions occurred. EBITDA has limitations as an analytical tool,
and investors should not consider this item in isolation, or as a
substitute for an analysis of OMNI's results as reported under IFRS or
U.S. GAAP, as applicable.
This press release also contains references to distributable cash flow
of Gibson. Distributable cash flow is used to assess the level of cash
flow generated from ongoing operations and to evaluate the adequacy of
internally generated cash flow to fund dividends. Changes in non-cash
working capital are excluded from the determination of distributable
cash flow because they are primarily the result of seasonal
fluctuations in product inventories or other temporary changes.
Maintenance capital expenditures are deducted from distributable cash
flow as they are ongoing recurring expenditures.
PDF available at: http://stream1.newswire.ca/media/2012/10/11/20121011_C6198_DOC_EN_19140.pdf
SOURCE: Gibson Energy Inc.