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Tetra Technologies agrees to divest offshore decommissioning services

Published 01 March 2018

Tetra Technologies has signed definitive agreements to divest its offshore heavy lift, plugging and abandonment, decommissioning, cutting, diving and related consulting services businesses and its Maritech operations, along with all of Maritech's related asset retirement obligations.

Through a series of transactions, Orinoco Natural Resources, LLC ("Orinoco") and Epic Offshore Specialty, LLC have agreed to purchase from TETRA the remaining offshore leases of Maritech and TETRA's subsidiaries involved in these offshore businesses – TETRA Applied Technologies, LLC, TSB Offshore, Inc., Epic Diving & Marine Services, LLC, and Maritech Resources, Inc.  As part of these transactions Orinoco has agreed to assume responsibility for completing all remaining asset retirement obligations of Maritech.

As a result of these transactions, TETRA will exit the offshore decommissioning services business and dispose of its Maritech subsidiary.  In addition to Orinoco's assumption of Maritech's $47 million asset retirement obligations, at the closings of the transactions, TETRA will keep the working capital of the businesses being sold and receive approximately $3 million in cash for inventory and fuel, and a $7.5 million promissory note payable on December 31, 2019.  Additionally, at closing Orinoco has agreed to provide TETRA with $47 million in surety bonds to secure the satisfaction of the Maritech asset retirement obligations.

"It has been our strategy to simplify our business model and focus on those markets where TETRA's products and services have competitive advantages, where greater market pricing and capital allocation discipline exist, and where those businesses can leverage each other's customer base, footprint and infrastructure," said Stuart M. Brightman, Chief Executive Officer of TETRA Technologies.  "Going forward, our focus will be on offshore and onshore fluids where our chemistry know-how and vertically integrated business model has proven to be strong throughout the recent cycles, on water management and frac flowback services in the shale plays, and on field compression, supporting the industry's needs for equipment and services to handle the significant volumes of associated gas coming from the shale plays. The divestitures of the offshore services and Maritech businesses are expected to reduce the volatility of TETRA's earnings from the seasonality inherent in offshore operations and eliminate the uncertainty of current or future cash outlays to complete Maritech's asset retirement obligations.

"TETRA's offshore decommissioning operations weathered a challenging period over the past three years.  When many of our competitors in this market went through restructurings or shut down their operations, our offshore decommissioning business continued to perform relatively well.  We sincerely appreciate the years of outstanding service of the management team.  The industry will continue to be well served by Peter Pintar and his team," added Brightman.

The transactions are expected to close within a short period of time, subject to various customary closing conditions, approvals and consents.  After closing, TETRA will report the historical results of the offshore decommissioning and Maritech businesses as discontinued operations.

Source: Company Press Release