Baku, Azerbaijan, Nov. 12
By Elena Kosolapova- Trend: U.K. Speedy company has entered into a 50/50 joint venture with J. & J. Denholm Group to provide asset management and equipment rental services to oil & gas sector in Kazakhstan, Speedy reported on November 12.
Denholm, through its specialist oilfield services business has a market-leading position in the provision of maintenance and turnaround services in Kazakhstan. Since 1999 it has operated this business through Denholm Zholdas LLP (DZ).
As part of the transaction, Speedy has acquired a 50 percent interest in DZ's existing equipment rental operation for a total cash consideration of $4.4 million, of which $1.4 million is being paid on or around completion and $3 million is payable by equal instalments of $1 million on each 1 November 2014, 2015 and 2016. In the 9 month period to 30 September 2013, the business generated operating profits of $1.4 million on revenues of $6.7 million. The gross book value of the assets comprised in the joint venture is $4.5 million. Further investment by the parties to fund growth in the joint venture will be made on a dollar for dollar basis.
DZ is headquartered in Atyrau, with an operating hub at Karabaton, adjacent to the onshore processing facilities at the huge offshore Kashagan field. In addition to Karabaton, it has permanent facilities at the onshore production plants at Tengiz and Karachaganak and at the export port of Aktau, which also acts as a supply base to Kashagan.
The joint venture will trade and operate under the brand "Speedy Zholdas" in Kazakhstan. Both Speedy and Denholm have identified the opportunity to leverage DZ's existing infrastructure by providing a full range of asset management and equipment rental services in support of existing clients of DZ, who include amongst others Chevron and Exxon, whilst at the same time extending such services to other oil & gas clients with whom Speedy already has, or is targeting, long-term relationships.
Speedy Zholdas already has a pipeline of near term opportunities supporting DZ in the services it provides major international oil companies under long-term framework agreements. Given the seasonal nature of its activities, the joint venture is expected to breakeven during 2014 financial year and to be earnings enhancing in 2015 financial year and beyond.