Milestone Environmental Services to pursue acquisitions in 2016, president and CEO says
Milestone Environmental Services, an oilfield environmental services provider, will make strategic acquisitions of distressed companies and assets throughout 2016, President and CEO Gabriel Rio said.
The Houston, Texas-based company will fund acquisitions through its private equity backer Intervale Capital, Rio said. Milestone provides oilfield waste disposal services for US oil and gas operators. It takes oilfield waste streams and injects them more than a mile below the earth’s surface.
Milestone currently has six injection locations throughout Texas.
Intervale acquired a majority stake in the family-owned business American Disposal Services in November 2014, and brought Rio on to scale the business nationally. American Disposal Services was renamed Milestone Environmental Services LLC in November 2015.
Acquisitions have become an attractive growth option for the company. Companies and oilfield waste assets one and a half years ago were “overpriced”, Rio said. Strong headwinds created by low commodity prices are creating distress among Milestone’s peers, creating difficulty for them to service debt. He expects acquisition prices to decrease throughout 2016 as pressure increases.
“It was a brutal oilfield market in 2015 and we expect 2016 to be worse,” Rio said. “What I’m seeing so far is there is still a pretty big spread between asking price and what we feel the businesses are truly worth. As we progress through 2016 and the pain persists, those things will come closer together.” Multiples are “difficult to pin down” because of the current low EBITDA environment, he said.
He said Milestone is looking at companies and assets in oilfields in Texas, North Dakota, Wyoming and Pennsylvania.
Milestone will continue to look at deals in the first half of the year, but Rio said he expects the pace of acquisitions to be quicker during the second half of 2016.
The company recently acquired an oilfield waste facility under construction near Smiley, Texas, for less than it would have cost to build, he said. Lenders took over the business and facilitated the sale to Milestone. Houston-based Latham and Watkins served as the company’s attorney for the transaction.
Rio said Milestone has several facilities under way in the Permian Basin and has started the permitting process to build in North Dakota’s Williston Basin.
In addition, Milestone will introduce new services such as solid oilfield waste, recycling of both solid and liquid waste streams and enhanced oil recovery from its waste streams this year.
Although the US oil industry has contracted throughout the last 12 months, Rio said waste management in oilfield remains underserved.
“We recognize we are pursuing a contrarian strategy to build service capacity during the worst downturn in a couple decades,” Rio said. “We want to put capacity in places where the industry needs it. We can do this with good returns today that should be excellent down the road when the market recovers.”
Milestone’s lender is Wells Fargo. Outside advisors interested in contacting Milestone should reach out to the Director of Marketing Inez Moriarty.
Contact: news@milestone-es.com
Source:
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