Mining company Dynamic Group (ASX: DDB) has entered into a binding agreement to acquire Airwell Flow Testing which is a division of the French fluids management company, Airwell Group. This strategic move is expected to reinforce Dynamic’s position in the water-well industry and tap into the burgeoning flow testing sector, known for its lower capital intensity.
It is also highly complementary to Dynamic’s existing Welldrill business (a specialist warer well drilling arm), providing the opportunity for additional deployments for both existing and acquired fleet.
The $2 million acquisition, scheduled for completion in February 2024, involves a payment structure with $1.5 million in cash due upon completion and an additional $0.5 million in cash slated for August 2024. Dynamic is set to take ownership of all assets and intellectual property associated with Airwell Flow Testing.
Dynamic Group CEO, Geoff Newman, said, “Dynamic is excited about the acquisition of the Airwell Flow Testing business. While only a relatively minor bolt-on acquisition, Dynamic has identified a number of organic growth opportunities and synergies with the existing Dynamic business that should assist in driving growth. The acquisition bolsters the offering of Dynamic’s water-well business, Welldrill, and provides a foothold in the growing flow testing industry which is lower capital intensity than existing drilling operations.”
Dynamic Group, a key player in specialised drilling and blasting services in Western Australia, recorded strong financials in Q1 FY24, boasting a revenue of $27.4 million, a 22% increase from the previous year, and an EBITDA of $4.3 million, marking an impressive 87% growth.
In the same period, it commissioned a state-of-the-art Drill and Blast training simulator, the only one of its kind in Australia. The simulator allows for accelerated training of personnel and is part of the Company’s commitment to enhancing in-house capabilities across its fleet.
Dynamic is counting on acquisitions like the Airwell Flow Testing one to further optimise operations.
Airwell Flow Testing, a reputable player in the flow testing industry, brings over two decades of expertise to Dynamic. With proprietary software and hardware tailored to tier-1 clients, the company has the capability to remotely monitor and control flow testing systems from its Perth headquarters using Supervisory Control and Data Acquisition (SCADA).
Flow testing is integral for assessing water quantity, quality, and sustainability, aiding in the management of water resources to meet environmental and regulatory standards. Dynamic’s Welldrill business, with a strong understanding of Airwell Flow Testing, has previously partnered to provide non-drilling services, identifying material synergies during their collaboration.
The transaction has been structured as an asset purchase, covering plant and equipment, systems related to the Airwell Flow Testing division, and associated intellectual property rights. The $1.5 million upfront consideration will be funded through an extended asset finance facility, with deferred consideration covered by existing cash reserves and/or further asset finance.
With completion planned for February 2024, Dynamic has positioned itself for continued growth and operational optimisation through such acquisitions coupled with technological advancements.
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