The skinny

The Woodlands-based Apergy Corp. (NYSE: APY), which spun off of an Illinois-based company last year, will merge with the upstream energy business of Sugar Land-based Nalco Champion, a division of Minnesota-based Ecolab Inc. (NYSE: ECL) created in 2013.

The details

The deal is expected to be complete by the end of the second quarter of 2020. Apergy will issue 127 million shares to Ecolab shareholders and assume net debt of approximately $492 million. Existing Apergy shareholders will own 38 percent of the combined company, while Ecolab shareholders will own the other 62 percent.

Based on Apergy’s Dec. 18 closing price of $30.67 per share, the deal values the Nalco Champion upstream energy business, now called ChampionX, at $4.4 billion.

The combined company

ChampionX is expected to generate about $2.4 billion in 2019 revenue, and the combined company’s pro forma 2019 sales are expected to be about $3.5 billion. The merger is expected to result in approximately $75 million of annual run-rate cost synergies within two years of the deal closing.

The combined company will remain headquartered in The Woodlands and will have about 8,000 employees companywide and a product portfolio of more than 2,400 global patents.

Sivasankaran “Soma” Somasundaram, president and CEO of Apergy, and Jay Nutt, CFO of Apergy, will retain their roles with the combined company. Deric Bryant, executive vice president and president of Ecolab’s Upstream Energy business, will serve as COO of the combined company and will oversee ChampionX as well as the integration of the two companies. The rest of the senior leadership team will be announced later. Apergy Chairman Daniel Rabun will continue to lead the combined company’s board, which will add two new directors appointed by Ecolab.

The ChampionX backstory

The ChampionX business consists of the drilling, completion and energy production; chemistry sciences; and solutions operations currently included within Ecolab’s Energy segment. Ecolab had acquired the upstream business as part of acquisitions of Nalco Holding Co. in 2011 and Houston-based Champion Technologies Inc. in 2013, creating Nalco Champion.

But Ecolab had been working toward a spinoff of ChampionX since February 2019. Ecolab will keep its downstream energy business, which sells a different array of chemicals to refineries and petrochemical plants.

The Apergy backstory

Apergy itself was a spinoff of the upstream business of Illinois-based manufacturer Dover Corp. (NYSE: DOV). That spinoff was completed in May 2018. Apergy provides highly engineered equipment and technologies that help companies drill for and produce oil and gas.

As of Dec. 31, 2018, Apergy had 3,300 employees in nine countries. The company reported revenue of more than $1.2 billion in 2018, up about 20 percent from 2017, but the net income attributable to Apergy fell nearly 16 percent to about $94.04 million.

The players

Centerview Partners LLC and Lazard are serving as financial advisers to Apergy, and Weil, Gotshal & Manges LLP is serving as legal counsel. BofA Securities is serving as exclusive financial adviser to Ecolab, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.

By: Olivia Pulsinelli  – Assistant managing editor

Courtesy of Houston Business Journal

https://www.bizjournals.com/houston/news/2019/12/27/deal-of-the-week-upstream-businesses-to-combine-in.html

GALVESTON

The number of programs aimed at encouraging young people to enter the maritime industry is surging as area leaders attempt to reverse a deepening shortage of skilled workers.

Facing an aging workforce, maritime industry leaders are struggling to find skilled workers to fill vacant positions. It’s a challenge that many community leaders have chosen to address by getting children interested in the career options early.

About 150 people work in the Gulf Copper Dry Dock & Rig Repair shipyard on Pelican Island, and finding 25 more people to fill empty positions has been a struggle, General Manager Craig Marston said.

“If things picked up too fast, I would be hard-pressed to man the job,” he said.

Maritime industry leaders are making a concerted effort to get young people interested in the field, in hopes they’ll join the workforce in the future, Marston said.

Three interns are working at Gulf Copper now, and for Marston, the primary benefit is introducing them to the industry, he said.

The shortage of workers and the importance of the maritime industry to the local economy are among the reasons the Galveston Regional Chamber of Commerce started a maritime career summer camp, President and CEO Gina Spagnola said.

The chamber started organizing the camp in 2013 in a partnership with the Sea Star Base Galveston, which specializes in youth education, when it saw a need to encourage more children to go into the maritime industry, Spagnola said.

“It’s been hugely successful,” she said, explaining that students in the camp learn there are many career options in the maritime industry, from administrative jobs to engineers.

For example, people can work in on-shore jobs like those at the Port of Galveston, another partner the chamber is working with to encourage more students to enter the industry.

At the camp, students visit the port to learn about the operational side of running the maritime field, and that there are still maritime jobs they can do even if they don’t want to spend months on a boat, Spagnola said.

Learning about the vast variety of maritime jobs was eye-opening for Odyssey Academy superintendent Jennifer Goodman, who grew up in Galveston County.

“I really didn’t know that much at all about the maritime field,” Goodman said.

Goodman helped form the chamber’s maritime summer program because she thought educators were missing an opportunity to teach students about the industry, she said.

Getting students interested in maritime careers is a matter of introducing them to the ocean, said Suzi Hanks, marketing and community outreach manager at the Sea Star Base.

The base has day camps and fishing camps for students, she said, adding that during spring break, it will have a camp devoted exclusively to maritime careers.

“If you ask kids around the Galveston-Houston area, they know the ship channel, and they’ve heard of the port, but they don’t know the economy of it,” Hanks said. “Many of them have never been on a boat before.”

Maritime jobs can pay as much as $70,000 a year even for recent graduates, said officials at San Jacinto College in La Porte, which has an associate of applied science degree in maritime transportation.

And the jobs are in demand.

The federal government estimates the country will lack about 70,000 mariners by 2022, said John Stauffer, associate vice chancellor of the Maritime Technology & Training Center at San Jacinto College.

Changes in technology and U.S. Coast Guard training requirements are inspiring many mariners to retire early, Stauffer said.

The college has long offered courses in the maritime industry, but its associate degree is only a few years old, said Amy Arrowood, director of the maritime transportation credit program.

The college expects to graduate 20 students in August, she said.

“The biggest thing is making kids aware that this career pathway exists,” Arrowood said. The industry needs people to go into entry-level jobs and start climbing the ranks, she added.

Fear of the water — because they aren’t used to spending time on it — could be one roadblock keeping students from pursuing careers in maritime.

“You eliminate fear through education,” Spagnola said.

Preparing students for the next five years of maritime demand is what community leaders are trying to achieve with camps and classes, Spagnola said.

Marston needs welders, crane operators, environmental technicians and fitters, who cut materials into the right shapes, he said.

“These are very, very good-paying jobs with benefits and everything,” Marston said. “It’s just challenging to get people who are willing to do that.”

By: Keri Heath The Daily News

Courtesy of The Daily News – Galveston County

https://www.galvnews.com/news/article_88489aab-e1c0-53c5-9fd4-9cf1dbd64bf6.html

Local maritime industry leaders and educators are working to encourage more young people to take jobs — requiring everything from long stints at sea to repairing ships — to ease a shortage of workers qualified for those jobs.

The industry has been facing a shortfall and an aging workforce, but filling those jobs and encouraging young people to enter the industry is crucial to the nation’s operations and security, local leaders and educators said.

A big part of the problem is that many young people just don’t know about the opportunities in the maritime industry, said Col. Michael Fossum, chief operating officer and vice president at Texas A&M University at Galveston.

And once students know about the industry, they have to be willing to rise to the demands of professionalism and, for some positions, many weeks at sea, Fossum said.

“It’s not an 8-to-5 job,” Fossum said. “That kind of job’s not for everybody.”

Jobs in the maritime industry can include anything from working as an engineer on a ship to transportation.

In an address at a maritime education summit this spring, national Maritime Administrator Adm. Mark Buzby estimated a shortage of about 1,800 mariners required for the nation’s needs.

The maritime industry is a competitive field in which to recruit new employees, said Niels Aalund, senior vice president of maritime affairs for West Gulf Maritime Association.

Workers are definitely getting older with fewer younger people replacing them, but there’s also generally low unemployment in Texas, which makes recruiting challenging, Aalund said.

“A common concern throughout the industry is a trained and educated workforce,” Aalund said.

That’s the main concern of Larry Terrell, branch manager at Danner’s Inc.

The transportation company shuttles maritime workers from the ships to the airport, stores or other places they need to go while in port and transports parts and equipment to ships, Terrell said.

It’s a demanding job that’s sometimes hard to recruit for, Terrell said.

“Some days are just crazy,” Terrell said. “It’s around the clock. It just never stops.”

Terrell’s trying to recruit more workers by reaching out to retirees about working part-time, he said.

But there is an encouraging number of young people interested in maritime jobs once they’re introduced to the options, said Richard Chapa, director of career and technology education at the Texas City Independent School District Industrial Trades Center.

Opened in 2017, the center provides high school students classes in trades skills, such as construction and welding.

This year, the center is graduating 10 students involved in the maritime program, and the freshman class has 22 students taking maritime classes, Chapa said.

The industry has a lot of opportunities for young people and students are starting to recognize that, said Nate Swerdlin, maritime instructor at the center.

“Of my seniors, pretty much all of them are going to take a pathway in maritime,” Swerdlin said. “That wasn’t the case two years ago.”

But maritime jobs could pay someone out of high school about $43,000 annually, with opportunities to advance to jobs paying $65,000 to $75,000 in a few years, Swerdlin said.

The shortage in young people isn’t unique to the maritime industry, Chapa said. Years of pushing four-year college means many students don’t realize the opportunities in skilled labor, Chapa said.

But staffing the maritime industry is crucial, Fossum said.

“We depend on maritime for our global reach to the markets around the planet and without that access we are severely cut off, we’re crippled,” Fossum said.

Staffing the industry also is crucial to the nation’s security, he said.

Fossum hopes advances in technology will attract more young people to the field, he said.

But there’s still a lot of progress to make, Fossum said.

“Right now, there is absolutely a shortage of ship engineers in the field and we see that even on our campus,” Fossum said. “We can’t attract enough students into that program to meet the demand that’s out there.”

Courtesy of The Daily News – Galveston County

https://www.galvnews.com/news/article_5357737c-4c33-5ae8-9431-aace0258a1c8.html

Houston-based Kinder Morgan Inc. (NYSE: KMI) plans to spend about $2.4 billion on expansion projects and joint ventures in 2020, according to a press release.

That’s in line with recent ranges the midstream company has been eyeing.

As of the end of the third quarter, Kinder Morgan had $4.1 billion in capital projects on its backlog, and it plans to spend between $2 billion and $3 billion each year on organic investment opportunities, according to a November presentation to its shareholders. In-service dates for projects on the backlog range from the fourth quarter of 2019 to 2023, the company said in the presentation.

“Capital projects are a high priority of ours. We spend $2 billion to $3 billion a year on capital projects, and we think that’s going to continue, certainly for the foreseeable future,” said Dax Sanders, the company’s executive vice president and chief strategy officer.

Sanders was speaking at the November investor presentation.

Pembina deal

The company also expects to sell its Canadian subsidiary and an associated pipeline to Calgary-based Pembina Pipeline Corp. (NYSE: PBA) for $2.5 billion by the first half of 2020. The company’s budget expectations right now anticipate using the proceeds from that deal to pay down debt, which would create about $1.2 billion of flexibility in the balance sheet that Kinder Morgan could use to repurchase shares or for other growth projects, the company said.

Kinder Morgan concluded a strategic review of the Canadian subsidiary in May and at the time had decided to continue to operate the company and hold on to its 70 percent share. KML was initially offered on public markets as a way of funding an expansion to the Trans Mountain pipeline, but the company completed the $3.46 billion sale of the Trans Mountain assets and expansion project to the Canadian government in the third quarter of 2018.

During the strategic review, Kinder Morgan considered selling its 70 percent interest in the Canadian subsidiary or buying back the 30 percent it doesn’t already own. The review included two bidding rounds and discussions with potential buyers, but Kinder Morgan ultimately decided the deals offered at the time weren’t satisfying.

 

By Joshua Mann  – Senior reporter, Houston Business Journal

Courtesy of Houston Business Journal

https://www.bizjournals.com/houston/news/2019/12/05/kinder-morgan-plans-billions-in-2020-project-jv.html