GR Engineering rallies on oil & gas move

Perth-based GR Engineering Services has diversified from mining into the oil and gas sector with the purchase of Melbourne company Product Solutions for $5.75 million.

GR Engineering will use cash reserves to purchase the company from Australian and Malaysian subsidiaries of Oceaneering International, which acquired Product Solutions as part of its acquisition of AGR Field Operations in 2011.

It expects Product Solutions to deliver revenue of about $36 million, and underlying earnings (EBITDA) of around $2.4 million in CY2014.

“We are very pleased to be acquiring Product Solutions,” GR Engineering managing director Geoffrey Jones said.

“GR Engineering has sought an acquisition opportunity that enables it to diversify its sector exposure whilst preserving the group’s technical base and maintaining its strong balance sheet."

Once the deal is complete, Product Solutions will continue to operate as an independent oil and gas services business unit of GR Engineering, with the company’s management team intending to continue in their roles.

Product Solutions general manager Joe Corvetti said the company looked forward to becoming part of the GR Engineering group, which had an outstanding track record of high-quality service and safety.

“As an independent business unit of GR Engineering, Product Solutions will still be able to provide its clients the same high-quality service, while realising the benefits of being part of a strong group with close board and senior management interaction and support,” Mr Corvetti said.

Product Solutions’ operations include maintenance and well management divisions.

Currently, around 90 per cent of revenue is generated by Product Solution’s Australian operations, with South-East Asian operations serviced through Malaysia considered to have growth potential.

Shares in GR Engineering are up 4 cents at 54 cents after hitting an intra-day high of 62 cents.