Hamilton, Bermuda (October 30, 2024)

Archer Limited ("Archer") today announces that it has entered into an agreement to acquire Wellbore Fishing & Rental Tools, LLC ("WFR"). WFR is a US based well technology player focused on fishing operation in the oil and gas sector. Fishing operations include multiple activities during the well life cycle, including the removal of stuck equipment, pipe, completion, downhole tools, casing, and liners for intervention, as well as workover and P&A operations.

The acquisition of WFR is well aligned with Archer's strategy and the transaction yields robust financial returns. This acquisition will strengthen Archer's presence in the Gulf of Mexico and position us for the estimated $18 billion deep water P&A market emerging in the Gulf of Mexico. It will also build upon Archer's relationship with global majors in the region.

WFR's 2024 revenue is expected to reach approximately $45 million, with an EBITDA margin above 30%, and cash contribution (EBITDA less capex) of 90% of EBITDA for the last 3 years. Archer sees clear and tangible cost and revenue synergies, as the WFR service offering and projects serve as attractive sales channels for many of Archer's high-end plug, slot recovery, and P&A services. The WFR acquisition is estimated to have a payback of approximately 3 years, improve Archer's 2025 EBITDA by 10-15%, and increase Archer's cash flow to equity on average by $15-20 million annually over the first few years.

Total consideration for the acquisition is $51.5 million, which will be financed through an equity capital raise of $40m (the "Equity Raise"), $10 million worth of shares issued to the existing owners of WFR based on 60-day volume-weighted average price at closing of the acquisition, and cash at hand.

The acquisition of WFR is expected to be closed shortly after the Special General Meeting expected to be summoned shortly after the Equity Raise.

Further information about the Equity Raise will be published by Archer in a separate stock exchange notice via newsweb.no when the Equity Raise is launched today.

M&A track record

The acquisition adds to Archer's strong M&A track record. In the last two years, Archer has invested just above $40 million in accretive bolt-on M&A transactions, with the acquired companies expected to generate more than $20 million of pro-forma EBITDA in 2024. This represents a multiple of about 2x 2024E EBITDA, with a payback of approximately 3 years based on 2024 cash flows.

Archer will continue to build on its successful M&A track record and look for accretive and synergetic bolt on acquisitions.

Q3 financial update

Archer has just announced 3[rd] quarter financial results where we outlined a record quarter with an EBITDA of $34.9 million, up 14% from the same quarter last year. Archer's EBITDA YTD is 15% higher than the same period last year.  

Growth and updated pro-forma guidance for 2024

Archer has grown substantially through organic growth and strategic M&A over the last few years.  We have guided 2024 EBITDA between $134 million and $140 million, representing approximately 60% growth in EBITDA from 2022 to 2024.

Including full year pro-forma financials for Iceland Drilling and WFR, we update our guidance for 2024 EBITDA to a proforma EBITDA in the range of $155-160 million, the mid-point representing a pro-forma EBITDA growth of 85% since 2022. Our pro-forma leverage ratio (NIBD / Adjusted EBITDA) is expected to continue to improve to between 2.2-2.4x at 2024 year end, down from 5.3x at 2022 year end.

Archer's main business is within brownfield operations with exposure to low marginal cost production, providing less exposure to current macro uncertainties and implication on delayed short cycle projects among oil and gas operators. We foresee modest organic growth in revenue and EBITDA in 2025 and anticipate our leverage ratio could drop to around 2x by end of 2025. 

Plan for refinance of debt in 2025 with subsequent pathway to dividend capacity

Archer has showcased significant underlying financial improvements since 2022, which together with the equity financing of this transaction, has improved Archer's credit metrics significantly. These improvements are positioning Archer to refinance our existing debt in 2025 at improved terms and creating a clear pathway to dividend capacity.

For further details, please contact:

Dag Skindlo, Chief Executive Officer | Mobile: +47 982 26 624 | Email: [email protected]

Espen Joranger, Chief Financial Officer | Mobile: +47 982 06 812 | Email:[email protected]

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)