HOUSTON – National Energy Services Reunited Corp. (NASDAQ:OTC:NESR), a prominent provider of integrated energy services in the Middle East and North Africa, announced today its acquisition of a minority stake in SALTTECH BV, a Dutch company specializing in thermal desalination technology. This investment, made through cash reserves, strengthens NESR's position in the water solutions sector within the MENA region.
The deal follows the successful implementation of Salttech's Dynamic Vapor Recovery (Dyvar®) process in various pilot projects, notably the Circular Water project in Saudi Arabia. NESR's Chairman & CEO, Sherif Foda, highlighted the technical validation of Dyvar® by their largest customer and NESR's dedication to addressing the MENA region's significant water challenges. Foda also expressed intent to localize Dyvar® manufacturing and research in Saudi Arabia, aligning with the company's strategy to invest in sustainable technologies and national talent development.
Salttech's Founder & CEO, Reimond Olthof, emphasized the shared commitment to tackling water issues in the energy sector and the potential for global deployment of Dyvar® technology across multiple industries. The partnership aims to enhance water stewardship and sustainable resource recovery.
The acquisition grants NESR the exclusive option to increase its stake and potentially become the majority owner of Salttech in the future. Both companies have been collaborating on the Dyvar® technology for several years, aiming to provide circular water and mineral solutions.
This strategic move was announced in conjunction with NESR's participation at the Future Investment Initiative forum in Riyadh. The collaboration between NESR and Salttech reflects a concerted effort to innovate within the environmental, social, and governance (ESG) space, particularly in water and mineral recovery solutions.
NESR, established in 2017, is one of the largest national oilfield services providers in the MENA and Asia Pacific regions, employing over 6,000 people across more than 15 countries. The company offers a range of services aimed at enhancing reservoir access and production for its clients.
This acquisition is based on a press release statement and is part of NESR's broader commitment to sustainable practices and innovation in the energy services industry.
In other recent news, National Energy Services Reunited (NESR) has been given a Buy rating by BTIG, with a price target set at $15.00, following its return to NASDAQ after previous delisting due to non-compliance with SEC filing requirements. The firm's positive outlook for NESR is largely based on the expected growth in Middle East oilfield activity, which is anticipated to increase by approximately 8% year-over-year in 2024, and by another 8-10% in 2025.
NESR's core market, which generates around 85% of its revenue, is expected to benefit from this rise, driven by factors such as the sustained oil and gas development in Saudi Arabia, UAE's plans to expand oil production capacity, and Kuwait's offshore discoveries. However, BTIG holds a more cautious view of NESR's near-term prospects in North Africa, which contributes to about 10% of the company's revenue, due to a more subdued activity outlook.
BTIG's analysis indicates a potential improvement in NESR's EBITDA margins due to the robust activity in the Middle East. The firm also projects that NESR's positioning in the MENA oilfield activity sector could result in significant free cash flow in 2025, with a forecasted free cash flow yield of 12%-14%, supporting the company's growth strategies. These are the recent developments for NESR.
InvestingPro Insights
National Energy Services Reunited Corp.'s (NASDAQ:NESR) recent acquisition of a minority stake in SALTTECH BV aligns with the company's strategic focus on sustainable technologies and expansion in the water solutions sector. This move is reflected in NESR's financial performance and market position.
According to InvestingPro data, NESR has demonstrated strong growth with a revenue of $1.23 billion in the last twelve months as of Q2 2024, and a notable revenue growth of 15.93% in Q2 2024. This growth trajectory supports the company's ability to invest in innovative technologies like Salttech's Dyvar® process.
InvestingPro Tips highlight that NESR's net income is expected to grow this year, and analysts predict the company will be profitable. These projections suggest that the investment in Salttech could contribute positively to NESR's financial outlook. Additionally, NESR has shown a high return over the last year, with a remarkable year-to-date price total return of 54.75% as of the latest data.
While NESR's gross profit margin of 15.1% indicates room for improvement, the company's focus on high-value technologies like Dyvar® could potentially enhance its profitability in the long term. The company's price-to-book ratio of 1.06 suggests that the stock may be reasonably valued, considering its growth prospects and strategic investments.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights on NESR's performance and outlook. There are 6 more InvestingPro Tips available for NESR, providing a deeper understanding of the company's financial health and market position.
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