MasTec Inc. (NYSE: MTZ) has acquired Big Country Energy Services Inc. for $103 million.
Big Country, headquartered in Calgary, Canada, constructs oil and gas pipelines and related facilities. The company’s customers include Shell Oil Co., Canadian Natural Resources Ltd. (NYSE: CNQ), Enbridge Inc. (NYSE: ENB), Suncor Energy Inc. (NYSE: SU), Encana Corp. (NYSE: ECA), Husky Energy Inc., ConocoPhillips (NYSE: COP) and Cenovus Energy Inc.
As part of the deal, MasTec will assume about $24 million in debt.
The transaction expands MasTec’s ability to take on energy infrastructure projects, as Big Country has 1,200 employees and 600 pieces of construction equipment.
Coral Gables, Fla.-based MasTec engineers, builds, installs and maintains utility infrastructure, including electricity utility and distribution systems, natural gas and petroleum pipelines, wireless and wireless communication systems, wind farms, solar farms and other industrial infrastructure.
“This is an area of good growth potential,” says Aaron Slavens, a partner at Greenberg Traurig LLP, which represented MasTec for the deal.
A boom in oil and gas M&A has sparked deal flow in the industry’s supporting sectors.
The activity is ultimately driven by the U.S.’ attempt to reduce dependence on foreign oil, says David Barkus, also a partner at Greenberg Traurig.
“As oil and gas exploration grows in Canada and the U.S., there’s a shortage of contractors who can build the pipeline and infrastructure,” Slavens says.
A few years ago, valuations on oil and gas services companies were down, according to Barkus. But because of the growth in the sector, the value an owner can get for the company has gone way up, causing founders to cash out.
Recent oil and gas services deals include private equity firm Clearlake Capital Group LP purchase of a division of Archer Ltd. in May that provides oil and gas equipment to exploration and production companies, for $244 million. Also in May, PetroWeb Inc. bought a segment of Neuralog LLP that provides technology to the oil and gas industry, and in April, Honeywell (NYSE: HON) announced it was acquiring Rae Systems Inc., which provides gas detection systems, for $340 million.
“It’s definitely driven by the natural gas exploration and the significant growth in that industry - it’s a very hot industry,” Barkus says.