Easternwell

Sector Outsouced Services
Industry Specialist Drilling
Location Australia
Investment Date May 2008
Original Deal Size A$202m
Realisation Date December 2010
Realisation Deal Size A$597m
IRR 36%

Company Description

Easternwell Group (“Easternwell”) is a leading specialist drilling and engineering services business with operations throughout Australia.

It was formed progressively from May 2008 onwards through the acquisition of six individual specialised drilling businesses and operates through two divisions; Energy & Utilities and Minerals.

  • Energy & Utilities: provides well servicing, drilling, nearshore geotechnical services, dam remediation services, catering, camp construction and management, logistics and environmental services to a range of blue chip oil and gas, uranium and engineering services companies.
  • Minerals: provides de-watering, backfill and development drilling to major resources companies in SA, WA and NT.

Investment Rationale

Major attractions of the opportunity were:

  • Focus on strong commodities with attractive growth profiles.
  • Majority of work undertaken in high quality, low cost, long life mines and mining regions.
  • High quality customer base including BHP, Rio-Tinto and Santos with long term contracts (up to 5 years) and long term relationships (up to 25 years).
  • Significant exposure to the production and development cycle (e.g. well servicing, de-watering and backfill).
  • Further consolidation opportunities driven by the founders’ industry contacts.

Ironbridge Value Added

Ironbridge had a clear strategy to add value by consolidating a fragmented industry that was beginning to face severe capital pressures.

The drilling services industry in Australia was fragmented and typically owner operated. Capital pressures were building on these businesses as large customers such as BHP, RIO and Santos were expanding rapidly and expecting their suppliers to grow with them. These larger customers were also requiring increasingly sophisticated OH&S systems and processes that smaller operators did not have the critical mass to implement.

Through its investment strategy Ironbridge focused on production related drilling and engineering services opportunities in the most attractive markets of iron ore and energy.  By consolidating a number of these businesses, Ironbridge created one of the largest specialist drilling businesses in Australia, with the scale to meet the expanding requirements of its customers.

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