CALGARY – Houston-based Civeo Corp. says it is buying Noralta Lodge Ltd. of Edmonton for $367 million in a deal that unites two major providers of workforce accommodation in the oilsands region of northern Alberta.
The companies say in a joint news release they expect to save $10 million annually by 2019 through operational efficiencies.
Lower oil prices over the past three years have dried up capital availability to build new oilsands and infrastructure projects, leading to high vacancy rates in the dozens of workcamps or lodges that surround Fort McMurray, Alta.
Civeo says it was attracted by Noralta’s ongoing contracts with two major oilsands producers which are to produce annual revenues of at least $130 million during their terms.
Civeo says it owns a total of 19 lodges or villages in operation in Canada and Australia with more than 23,000 rooms, while Noralta has 11 lodges with a total of 7,900 rooms in northern Alberta.
Civeo is to pay $210 million in cash and issue 32.8 million Civeo common shares, plus issue preferred equity options to buy 29.3 million more common shares two years after closing.