The Wetherby-based hazardous waste firm has signed a joint venture agreement with Scomi Oiltools to take a controlling stake in a new company formed from the existing operational assets of Scomi in the UK.
Augean will pay £2.05m for a 70 per cent shareholding in the new company, which is to be called Augean North Sea Services.
“This deal will broaden our offer into the offshore market,” said Augean’s chief executive Paul Blackler.
“We’ll be dealing with all waste coming off from the North Sea. The key point is that North Sea operations have seen a decline. This is an entry point at the bottom of the cycle. The market is growing again.”
Augean believes it has long term potential in offshore waste management and is keen to service North Sea operators at Aberdeen.
Drilling for new oil and gas produces waste rock contaminated with oils and oily liquid waste. This is brought onshore by boats, treated onshore and then disposed of.
Another opportunity lies in decommissioning old drilling platforms. Augean said the joint venture will give it access to the emerging market for the decommissioning of redundant offshore structures and naturally occurring radioactive materials, which are expected to grow over the next 10 years.
As part of the deal Augean will provide a loan of £1.0m to allow Scomi to repay existing debt
The total consideration of £3.05m will be drawn from Augean’s existing £10m bank facility.
Augean North Sea Services is expected to deliver annual revenues of £6.0m
The joint venture will build on the existing relationship between Augean and Scomi for the treatment of drill cuttings from offshore oil and gas exploration, using Augean’s thermal treatment and disposal facilities at Port Clarence and Scomi’s offshore waste management resources in Aberdeen.
Augean said that by combining these activities through Augean North Sea Services, the new venture will have the capability to source, contain, treat, recycle and ultimately dispose of offshore wastes for its customers through an integrated waste management supply chain.
The joint venture will operate assets transferred from Scomi’s existing UK operations, based at sites in Aberdeen and Lerwick in Shetland.
These assets include offices and industrial premises, which will provide a base for managing and storing wastes, a large waste treatment and storage facility at Pocra Quay in Aberdeen and specialist equipment used in the management and transportation of waste materials from North Sea drilling platforms.
In addition, 40 experienced employees based in Aberdeen will transfer from Scomi into Augean North Sea Services to manage and operate the venture.
Augean North Sea Services will provide services to existing Scomi customers and progressively develop its activities and services over the next 12 months.
At the core of the operation will be drilling waste management on the offshore platforms, supported by onshore treatment of drill cuttings, provided through a service contract with the existing Augean facility at Port Clarence.
It will also include the treatment and disposal of other wastes from service vessels utilising the specialist treatment and storage facility at Pocra Quay.
The integration of the new business will take place during the second half of 2012, with positive contributions towards profit expected from 2013 onwards.
Augean said its expectations for 2012 remain unchanged.
The group recently reorganised its business into three divisions: Land Resources, Waste Network and Oil & Gas Services.