Enersol RSC acquires majority stake in Gordon Technologies for $270m

Enersol RSC LTD, a joint venture between ADNOC Drilling Company and Alpha Dhabi Holding, has announced the acquisition of an additional 42.206% equity stake in Gordon Technologies LLC for approximately $270 million. This strategic acquisition positions Enersol as the majority equity holder in Gordon, significantly enhancing its market presence in the measurement while drilling (MWD) sector.

Expansion of Stake Strengthens Market Position

The $270 million transaction aligns with the valuation basis used for Enersol’s initial 25% stake acquisition in Gordon earlier in January 2024. With this latest acquisition, Enersol now controls a substantial share in Gordon, underlining its commitment to expanding its footprint in the oil and gas technology arena.

Funding for the acquisition will be structured with approximately 80% of the consideration paid at closing, while the remaining portion is slated for payment over the next two years, contingent on specific performance benchmarks. The completion of the transaction is pending customary regulatory approvals and closing adjustments.

Enersol RSC LTD acquires a majority stake in Gordon Technologies for $270 million, enhancing its leadership in MWD technology and supporting UAE’s energy goals.

Economic and Strategic Benefits

Gordon Technologies, which remains debt-free, brings considerable economic value to Enersol, contributing positively to profitability, valuation multiples, cash flow generation, and dividend potential. Notably, Gordon boasts a free cash flow yield of more than 10% for the fiscal year 2023, reflecting its strong financial health and operational efficiency.

As a leading provider of MWD technology, Gordon specializes in tools that measure essential drilling parameters near the drill bit and transmit data to the surface seamlessly during operations. The company has recently established its business in Abu Dhabi and plans to commence field operations across the MENA region in Q2 2024.

Technological Advancements and Market Impact

Gordon is recognized as one of the industry’s leading fully integrated MWD providers, owning one of the largest modern MWD system fleets. This capability enables Gordon to offer enhanced drilling efficiency, performance, and reliability across a variety of drilling environments, including both conventional and unconventional as well as standard and high-temperature applications.

Recent innovations by Gordon include the launch of rotary steerable interconnectivity systems, which continue to drive growth and technological advancement in the sector.

Supporting Broader Economic and Environmental Goals

This acquisition aligns with the United Arab Emirates’ broader objectives of enhancing energy security, supporting the net zero emissions agenda, and promoting economic diversification. Enersol is actively pursuing additional acquisitions and investments to create a scalable ecosystem that will not only enhance market value but also improve operational efficiencies across the board.