CHC Group to acquire Babcock’s oil and gas business

CHC Group has entered into a conditional agreement for the acquisition of the oil and gas aviation business of Aberdeen-based Babcock International Group.

Babcock transports offshore oil and gas crew to several platforms in the North Sea, as well as Denmark and Australia. It operates 30 aircraft across its three locations.

The company’s financial results published in June 2020 reported it had written down $31m (£22.2m) of assets in its oil and gas business and “recognised costs of $43.5m [£31.2m] in relation to the impairment of right of use assets and onerous customer contracts”.

Babcock also ended oil and gas contracts in Ghana and Congo and incurred charges of $9.9m (£7.1m) in relation to this.

“The oil and gas aviation market has deteriorated while we saw delays and increased cost pressures in aerial emergency services. Because of these pressures we have taken action to further reduce our oil and gas fleet and restructure our Aviation sector,” said Babcock.

However, the company won contracts later in 2020 with energy company Total for operations from Aberdeen and Esbjerg, Denmark.

Steve Robertson, principal and founder of Air&Sea Analytics, told Energy Voice it is likely CHC will consolidate the ground operations in Aberdeen and achieve cost savings, meaning it could operate Babcock’s current contracts more profitably.

At a recent Helicopter Investor Town Hall meeting, Robertson said the sector was seeing recovery in early 2021. The industry’s ability to adapt has allowed it to return almost to a normal level of [flight] activity,” he told delegates.

The CHC-Babcock deal, which is subject to pre-closing conditions, is expected to complete in the second quarter of 2021. It is intended that CHC will seek clearances for the transaction from antitrust authorities in the UK and Australia, though completion is not conditional upon such clearances being received.

Both were unable to comment on the deal value and other specifics at the time of writing.