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Valerus Oil, Gas Unit Sold to UK Engineering Firm
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YOUNGSTOWN, Ohio -- The proposed sale of Houston-based Valerus' field solutions business line to an international engineering group isn't likely to affect a partnership the company secured last year with Brilex Industries, its CEO says.
"Our anticipation is that the partnership will continue and grow and prosper," said Pete Lane, CEO of Valerus, during a conference call Monday.
Under a tentative agreement announced Monday, Valerus said it intends to sell its oil and gas field solutions business line for $435 million to a subsidiary of Kentz Corp. Ltd., whose headquarters is listed on the island of Jersey in the United Kingdom.
"The Brilex partnership with Valerus was focused on manufacturing production equipment in Youngstown to serve customers in the Marcellus and Utica [shale]," Lane said. "Our expectation is that the partnership will continue under the leadership of Valerus Field Solutions within Kentz."
In November 2012, Brilex, based here, announced that it had secured a partnership with Valerus to manufacture oil-and gas-production equipment to operators in the Utica and Marcellus shale plays.
In July of this year, the partnership opened its operations at a 50,000-square-foot, $1.5 million plant on Andrews Avenue.
Lane will become CEO of a separate, stand-alone company formed from Valerus' contract services and aftermarket services divisions, he said. Kentz will continue marketing the field services under the Valerus brand.
Valerus provides compression, processing and treating, and production services and equipment for the oil and gas industry and employs 1,400 worldwide.
"We expect the transaction to close in early January," Lane said.
Mark Peyton, Kentz head of corporate development, said that the acquisition of Valerus will help the company move into new markets, especially in the United States and Latin America.
"Through the acquisition of Valerus Field Solutions, we'll now be able to move into that," he said. "We've been very successful over the past five years in growing ourselves organically, and we view that the acquisition will further enhance opportunities in the future."
He said Kentz wants to focus on providing service and equipment for small to mid-size, modular oil and gas facilities, which he calls a "critical part of the strategy that we've been putting in place for the past year."
About 615 are employed at Valerus Field Solutions, 200 of whom are engineers and technical personnel, Peyton said.
"We also think that the strong, diversified client base which Valerus has been very successful in serving will be instrumental in helping us grow the business, and helping us bring new clients to Kentz," Peyton said.
Lane said both companies are very excited and "bullish" about the growth of energy projects within North America and around the world. The transaction also provides new capital to expand the contract and aftermarket business, he said.
"I'm very excited about what this transaction will do for both Kentz and the contract services entity," Lane said.
In 2012, Valerus' field services division reported EBITDA of $51.5 million on revenues of $492.9 million.
Kentz is a global engineering service provider to the energy industry with 14,500 employees in 30 countries, according to its website. In 2012, the company recorded $1.4 billion in revenues and posted a net gain of $184.6 million for the year.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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