Aberdeen offshore solutions provider OEG Energy Group has raised $140 million (£98.5 million) to continue its expansion into the renewables sector.
OEG chief executive officer John Heiton told Energy Voice the financing provided liquidity as the company continued work on as many as 12 acquisitions in the offshore wind sector, primarily in mainland Europe.
The acquisition efforts are part of a push to increase turnover from $400 million to beyond $1 billion (£820 million) over the next five years.
“(The companies) are of varying sizes and we currently have on our target list around 12 that we’re currently working on, ranging from early-stage discussions through to due diligence and negotiating SPAs (sales and purchase agreements) to get those across the line,” Mr Heiton said.
“It’s quite a targeted (process) of, we want to be in this space, and these are the companies we’ve identified, these are people we know, and then we try and bring them into our club.
“We’ve got a high conversion rate, so of those 12 (acquisition targets) I would expect to see maybe six or more that we convert into deals over the next 12 months or so.”
Strong market outlook for offshore wind
OEG said the global market outlook for offshore wind is strong, pointing to statistics from the Global Wind Energy Council which forecast over 380 GW of new offshore wind capacity will be added over the next decade (2023-2032), bringing total offshore wind capacity to 447 GW by the end of 2032
OEG operations are split into two main divisions focusing on oil and gas and renewables, providing cargo handling equipment and services to the offshore sector across 35 countries in every hydrocarbon region.
Mr Heiton said the OEG Renewables arm, focused on offshore wind, currently accounts for around 40% of company revenues.
As part of its acquisition plans, Mr Heiton said OEG hopes to increase its revenue share from renewables to as much as 80% as part of sustainable long-term growth for the business. .
“Effectively how we’ve been growing so far is through acquisitions to build up our key strengths in offshore wind and then grow organically beyond that and integrate those businesses,” he said.
“Currently that offshore wind business makes up about 40% of our revenues and we’ve got an acquisition target that will probably move us to 50%.
“Then with further acquisitions, we expect to see that grow to up 60, 70, 80% of the business.”
OEG targets services and people based growth
Mr Heiton said as the offshore wind industry typically requires less transportation of equipment compared to oil and gas, OEG is targeting areas in the market that are more services and people based.
“There is less equipment carried back and forth to a wind turbine and therefore the areas we’re offering in that market are much more services based, particularly being more people based,” he said.
“(Those areas) relate to both the development phase of the offshore wind farm and the operations and maintenance (O&M) side as well.”
As part of the ambitious growth strategy, Mr Heiton expects the company’s current headcount of around 1,000 employees to grow in line with projected revenue growth.
“Particularly in offshore wind, it is a lot more people related and therefore we would expect it to grow in line with our growth and revenue projections, but I think it will be a mix around the different countries as to the different requirements.” he said.
“What we’re trying to very much do is provide a global offering but with local content provision.
“Some of the industry in wind has historically been a lot of expats working out in Taiwan, for example, but what all the countries obviously want to have, the UK included, is much more international expertise, but with local personnel providing local services and that’s how we see the business developing.
“There will be a lot more job creation in some of these other countries operating around the world.”
OEG expects growth in Scotland
Within the UK, Mr Heiton said he expects the share of OEG Renewables staff based in Scotland to increase as the wind sector continues to grow in the North Sea.
“I would say in our offshore wind business, we have about 350 employees in the UK and about 300 of those are in England and 50 are in Scotland.
“In our offshore business, because it’s much more oil and gas related, which is still very focused on Aberdeen, that has been probably 90% Scotland based.
“So, the different parts of our business have a different mix, but I would expect to see as the number of turbines in Scotland increases over time that it’s going to increase quite materially there.”
‘Double digit growth’ for OEG outside Europe
Across the rest of Europe, Mr Heiton said the company was “doing very well in France” working on three offshore wind farms developments with further opportunities in the Baltic Sea and elsewhere in the Mediterranean.
As OEG continues to target further growth in the renewables sector, Mr Heiton said its more traditional oil and gas offering is still seeing “vast double digit growth rates” driven by offshore activity levels in places like the Middle East, Brazil and the Caribbean.
“We operate in every hydrocarbon region and the UK, for example, makes up about 10% of our offshore cargo handling business and so some of the regions we’re in, like in Guyana for example, it’s very much on the up.” he said.
“It’s a new industry like the North Sea was in the 1970s.”
Mr Heiton said OEG benefited from an increasing demand for safety improvements and operational enhancements being adopted in developing markets.
Developing markets were also moving towards increased demand for outsourcing services, he said.
“The good thing for us is we have either the equipment or we can support them.” he said.
“When the industry does draw down here (in the North Sea), we can relocate that to the other regions.”
OEG said the $140 million in financing comprised of a $36 million drawn Term Loan B (TLB) and a $104 million Revolving Credit Facility (RCF).
The company said the RCF is provided by NatWest, Citi, and Santander and the TLB is provided by NatWest, Citi, Santander and Goldman Sachs.