NOV adds another piece to the production puzzle

March 1, 2012

National Oilwell Varco is looking to establish a major foothold in the flexible pipe business with the acquisition of Danish manufacturer NKT Flexibles, a joint venture between NKT Holding and Subsea 7 since 1999.

The $670 million deal, announced early February, is expected to close in the first half of 2012.

NKT Flexibles reported revenues of about $264 million in 2011.

The merger is expected to provide financing for NKT's plans to build a new factory in Superporto do Açu, Brazil, details of which were unveiled last October. The plant will have a capacity of more than 250km of flexible pipe per year, most of which will be used to fulfill a four-year, $1.7 billion frame agreement with Petrobras signed last year.

Over the past several years, Houston-based NOV has been building what VP of corporate development Tom McGee calls ‘a more systematic approach' for offering customers a broader range of products and services in the offshore production arena, including FPSOs. Last year, the company completed the $772 million acquisition of Ameron International, a leading manufacturer of fiberglass-composite pipe for oil, chemicals and corrosive fluids. That deal followed 2010's purchase of BW Offshore subsidiary Advanced Production & Loading (APL) for $500 million, giving NOV the technical design capability for turret mooring and production systems, among other technologies.

Commenting on the NKT deal, McGee said: ‘To us, this is another logical step forward in expanding into the offshore production market for NOV. That's the basis of the NKT acquisition. It was the basis of the APL acquisition. And it's been the basis of several smaller acquisitions that we've done – pieces to that offshore production puzzle, which to date has been largely focused on the FPSO market, but in the long run has broader applications.'

Brazil, he added, ‘will always be a big market for these products. But we see other markets growing. The Gulf [of Mexico] has huge potential for a lot of these types of products, FPSOs in particular.' RM



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