12.11.2013

Speedy JV in Kazakhstan

Speedy has invested in a 50/50 joint venture with J. & J. Denholm Group to provide equipment rental and asset management services to the oil & gas sector in Kazakhstan.

Denholm has a leading position in the provision of maintenance and turnaround services in Kazakhstan and has been operating in the region from more than 20 years.

Since 1999 it has operated as Denholm Zholdas with headquarters in Atyrau and an operating hub at Karabaton, adjacent to the onshore processing facilities of the offshore Kashagan field. In addition to Karabaton, it has permanent facilities at the onshore production plants in Tengiz and Karachaganak and at the export port of Aktau, which also acts as a supply base to Kashagan.

The joint venture will trade and operate as Speedy Zholdas and will use Denholm Zholdas' existing infrastructure to provide a full rental operation, initially to support Denholm's existing clients, which include Chevron and Exxon. With rental opportunities already lined up, the joint venture is expected to breakeven during in fiscal 2014 and to move into profit the following year.

As part of the transaction, Speedy has acquired a 50 percent interest in Denholm Zholdas' existing equipment rental operations for a $4.4 million of which $1.4 million is being paid on or around completion with the balance payable in equal instalments of $1 million on 1st November 2014, 2015 and 2016.

In the nine month period to 30th September, the business generated operating profits of $1.4 million on revenues of $6.7 million. The gross book value of the assets in the joint venture at the start, is $4.5 million. Further investment to expand the joint venture will be made on a dollar for dollar basis.

Speedy's chief executive Steve Corcoran said: "We are delighted to be accessing the exciting oil & gas market in the Caspian by working in partnership with such a well-established and highly-regarded partner. Denholm has an enviable reputation, built up over 20 years, for providing outstanding levels of service to major international oilfield clients in Kazakhstan. Having recently supported Denholm Zholdas on planned turnaround projects in the region from our existing business, this joint venture is a natural next step for both parties. Together with the Zadco project at Abu Dhabi's Zakum field, this joint venture means that Speedy now has a long-term presence at four of the largest oilfields in the world."

Denholm's chief executive John Denholm added : "We are delighted to be bringing Speedy in as a partner in our Kazakh plant hire business and believe their expertise and access to equipment will enable us to improve the level and range of service that we can offer our customers."