Brooks, Medicine Hat, Alta. 听鈥� Renegade Oilfield Construction Limited, which has a shop in Kindersley as well as Medicine Hat, Alta., is merging with Align Energy Services of Brooks, Alta. Vada Capital, a private equity firm which has had a stake in Renegade, is to be a partner, as Align鈥檚 partners sell to Vada, but then buy shares in the company.
The merger came down on Nov. 20, and is expected to take 90 to 120 days for the two companies to integrate.
Pipeline Newsspoke to Dale Casat, partner with Align, on Dec. 10, Geoff Moser, partner with Renegade and Jeff Robson, president and CEO of VADA, on Dec. 11.
Align is based in Brooks, and about a quarter to a third of their employees live in Medicine Hat. That has allowed them to run crews out both centres.
Casat said of Align, 鈥淲e do facility, maintenance, and pipeline construction. We build gas plants, oil batteries. We鈥檙e doing lots of single well batteries with some of our clients. We鈥檝e done some larger pipelines 鈥� 20 kilometres and better for various clients. And we take on a lot of the maintenance.鈥�
The maintenance work was key in how they survived the oil downturn that took hold in 2014, and is taking hold yet again now. 鈥淭hat鈥檚 the stuff that has to happen. When we went through the recession in 鈥�14, that鈥檚 where we focused our resources,鈥� Casat said.
Align has done some work in Saskatchewan, around Kindersley.
Renegade鈥檚 work has had some overlap with Align, but most of their work is related to pipeline construction. Moser said, 鈥淥ur speciality is pipeline and wellsite fabrication.鈥�
With regards to their Saskatchewan work, Moser said, 鈥淚n Kindersley, we went up there when oil hit the skids in April 2016 to do a business feasibility study. Prices were really weak at that point in time.
鈥淲e found a shop and yard, and executed a lease. We鈥檝e been working up there since the summer of 2016,鈥� He said. Since then they鈥檝e done a substantial amount of work the three largest operators in the Viking play.
鈥淲e have multiple crews working up there consistently,鈥� Moser said of Kindersley.
That includes trunk lines, gathering lines and flow lines. 鈥淲e鈥檝e done facility work as well 鈥� expansions on injection facilities, batteries and so forth.鈥�
鈥淚t鈥檚 been consistent. We were cautiously optimistic, and we were surprised,鈥� Moser said of their Viking work. 鈥淲hen we set up in 2016, we didn鈥檛 know what to expect. We knew that area was a void for pipeline contractors. There wasn鈥檛 a big local presence, like in some areas, like Estevan.鈥�
With shallow gas in southern Alberta being in the tank for the last decade, there were a lot of good, experienced, qualified people looking for work, and Kindersley wasn鈥檛 too far away.
鈥淕uys were willing to make concessions to go to work, because the work was so steady and predictable. We were able to deploy some high calibre people to our clients, and they saw value in that,鈥� Moser explained.
In Kindersley, Renegade averages about 20 people, and 30 in Medicine Hat. People and equipment are deployed as necessary.
Each company has around 50 people, bringing the combined total to around 100. 鈥淭here won鈥檛 be any reduction. We鈥檙e hoping to be able to ramp up, now that we can face some of that larger work.鈥� Casat said.
Align and Renegade have their COR in both provinces as well. 听
Moser noted that the west central Saskatchewan area seems to remain fairly strong, even when oil prices have been low. 鈥淚t was good for us, good for our staff. There wasn鈥檛 a lot of work in southern Alberta at the time,鈥� he added.
Merger
The combination of the two results in complementary capabilities.
Vada is the majority shareholder in Renegade. Of the combined company, Robson said, 鈥淲e鈥檙e one of the partners.鈥�
Vada, a Calgary-based private equity firm, is taking a minority stake overall. Vada has been around since 2001. Robson said he was an operations guy who grew up in the seismic business.
The merger was a long time in the making. Robson said they first talked about it three years ago. 鈥淚t鈥檚 taken a number of years to get everybody on the same page,鈥� he said.
Robson said a CEO hasn鈥檛 been named yet.
Vada has interests in a seismic exploration business, some financial businesses, and a few startups in the water business.
鈥淰ada is buying shares from Align, and we are buying back into the combined entity,鈥� is how Casat characterized the merger.
Asked about the motivations behind the deal, Casat said, 鈥淚 think what we鈥檙e trying to do is provide strength and efficiencies for our clients. Renegade is more a pipeline-orientated company, whereas we鈥檙e more facility. So we鈥檙e able to offer both of those strengths to our clients, and more efficiently by sharing people.鈥�
They鈥檝e already begun sharing quality control and safety people. 鈥淏y doing this merger, we鈥檝e now captured this whole market and can provide that to our clients,鈥� he said.
Casat explained, 鈥淲e want to provide the best people possible. You have to retain those people. By joining, merging with Renegade, now we鈥檙e able to keep more of our core people busy. It鈥檚 not just what we have. If they have work, I can send a few guys, too, that I can鈥檛 afford to lose in this business. If I don鈥檛 have the work, it gives me the opportunity to keep those guys working, so they stay with us. And we can, in turn, offer the best people back to the client.
Moser said, 鈥淚t just made sense, from a personnel, equipment, logistics and efficiency point of view. We had quite a bit more equipment than Align, being that we were predominantly pipeline, and they were facility. There were times that equipment was sitting. Now, post merger, we鈥檙e able to share our assets to make sure our utilization levels on our gear are higher, make sure our utilization levels on our personnel look better. Trucking was a big one.
鈥淚 think it will add new capabilities collectively,鈥� Robson said.
Vada bought into Renegade in 2012, and Moser bought out previous partners six months later.
The merged company will eventually work under the Align name in the future.. Each division will operate similar to they are now, in what could be considered parallel management of the divisions.
Moser said, 鈥淚 think it will give us the opportunity to look at bigger, more complex projects on the facility side, and on the pipeline side, because we鈥檙e going to have that much more bench strength with our people and our assets. It might offer a strategic component, where we can look at future acquisitions and growth initiatives, and access to capital with Vada capital behind us.鈥�
Renegade had a brief presence in Estevan about a decade ago, under different ownership. It withdrew with the 2009 oil downturn.
鈥淧utting these two businesses together made us very strong, and we want to continue being very strong. We鈥檒l see what the future holds. There are a lot of things out of our control,鈥� Robson said.
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