>>> Kemira interested in further oil, gas and mining buys, exec says

Kemira interested in further oil, gas and mining buys, exec says

Kemira (HEL:KRA1V), the Helsinki, Finland-based chemical company, will seek additional acquisitions following a recent transaction, said Tarjei Johansen, president of the company’s oil and and mining segment.

Though no purchases are immediately in the works right now, the company, which bought Kansas-based Polymer Services in December, is actively screening potential acquisition candidates in the oilfield services chemical manufacturing sector. Small service companies would also complement Kemira’s current chemical, technology, service and equipment offerings, said Johansen.

Prior to buying Polymer Services, which focuses on polymer gel treatments for oil recovery, Kemira had been supplying it with polymers. Kemira discovered what “an interesting little company” it was, with “smart people and services we were looking to incorporate into our portfolio,” said Johansen.

Going forward, Kemira would be interested in other technological services or equipment services targets, to bulk up its US shale industry-focused oil and gas segment, Johansen explained. Eventually, it will look globally for acquisitions as well, but wants to “learn to walk before we run,” he said.

On a global basis, Kemira generated around EUR 380m (USD 415m) of its EUR 2.1bn (USD 2.3bn) in YE14 revenue from oil, gas and mining. Polymer Services was its first acquisition for the segment in the US. In 2013, the segment acquired Italy-based 3F, which also has a US presence.

Multiples for targets in the space tend to be in the 7x-8x EBITDA range, depending on the company’s product offerings, services or equipment, according to Johansen. Some targets are still trading in the double digits, he noted.

Kemira’s peers in the oil, gas and mining space include BASF (ETR:BAS), Clariant (VTX: CLN) and SNF, he said.

Kemira’s oil, gas and mining business is focused on chemically enhanced oil recovery in the Canadian oil sands region. In the process, known as “polymer floods,” a mixture of water and polymers is injected into a reservoir to push out more oil to the wells, increasing their production, he explained.

Chemically enhanced oil recovery is usually the third step in enhancing production, following two oil extraction procedures. Johansen said the technology for this third step has been around since the 1980s but was rarely used in the last 10 years. These “floods” can last up to 30 years, so the technology will continue to be important regardless of fluctuations in oil prices. “The oil well infrastructure is already there,” he said.

In addition to oil, gas and mining, Kemira focuses on pulp and paper, where Johansen said it is the largest player globally, and chemicals and services for municipal wastewater.