LONDON, UK: ADM Energy PLC, a natural-resources investing company, has announced that it has acquired a majority stake in OFX Technologies, LLC, a technology company that provides solutions to the US upstream oil and gas industry.
The investment is part of ADM’s strategy to diversify its portfolio and tap into the growing market for oilfield technology.
The total consideration for the investment is US$1.285 million, which includes the issue of 86 million new ordinary shares, 39.9 million warrants, and US$235,000 in cash. ADM will hold approximately 53.1% of the economic interest in OFXT, which is valued at US$2.3 million or 4.5 times its projected revenue for the first quarter of 2024.
OFXT’s technology solutions aim to increase efficiency, lower costs, and aid in the management of regulatory requirements for the US upstream oil and gas industry. The company has a revenue-generating business model based on monthly recurring fees from its clients. Barclays estimated that the upstream technology spending by the industry will reach US$30 billion by 2025, up from US$5 billion in 2020.
Commenting on the OFX Technologies Investment Stefan Olivier said, “The oil and gas digital services market is in a period of rapid growth, the investment in Efficient Oilfield Solutions gives ADM shareholders exposure to this sector through a company with momentum in the industry led by an impressive and focused management team.
ADM intends to maximize the value of its traditional upstream oil and gas interests and consistent with its Investing Policy will continue to look at a range of opportunities within the natural resources space, however the Board of ADM have resolved to focus on energy technology as we believe the opportunities available to the Company are very attractive in terms of driving growth in both value and cash flow per share.”