Aberdeen’s OEG Energy Group has bought up 14 businesses in the last four years and boss John Heiton aims to maintain the pace.
His oil and gas to renewables services firm’s firepower is backed by Oaktree Capital Management. The US private equity group acquired OEG last year through its $5 billion (£3.95bn) power opportunities fund, which targets investments across the energy supply chain, increasingly in the electricity transmission sector.
The Los Angeles-based fund manager was keen for Heiton’s team to continue with its strategy when it came on board.
Since joining the fold at Oaktree, which also includes Glasgow-based power generator business Aggreko, OEG has invested over £200m in buyouts, including deals for high voltage specialists, ONRG, and OPS Wind earlier this year.
The firm initially launched its OEG Renewables division, largely targeting offshore wind, in 2021. But last year provided the firm occasion to highlight its 50-year pedigree in traditional oil and gas services. Its heritage dates back to 1973, when it bought Ferguson Seacabs, which launched on the back of the first North Sea oil field, Argyll.
OEG now employs 1,300 people across 65 locations worldwide and says it is on track to deliver revenue in excess of £400m this year for 2024, with the aim to achieve £800m turnover within the next five years.
© Supplied by OEGHeiton is still on a roll, targeting investments between £50m – £100m each year, although he admits it’s not always easy.
“You’d think spending money is fun but no, it’s hard to find the right business, the right culture, the right skills and services at the right price.
“It’s not like going into Harrod’s and spending wildly with the credit card. It is more shopping wisely at Home Bargains.”
Pace is driven by a range of factors, depending on what is prompting owners to sell, be it due to tax changes, debt or divorce.
“Obviously those are unplanned. It’s always really hard to actually say what the pace of acquisitions might be,” Heiton said.
“Some of these ones we’ve worked on, we’ve been talking to for three years before we actually acquired them.
“But our expectation is to continue to acquire around about £50 to £100m a year. We have the facilities and the cash to be able to do it. It’s just can we find the right targets.”
OEG’s renewables side now generates over half of the group’s revenue, albeit this is at “slightly lower margins”, than in its oil and gas side, said Heiton, who has been with the firm for 16 years.
The company is working in offshore wind in the UK with the likes of Ørsted, as well as in the Netherlands and Germany not to mention newer markets such as South Korea and the Baltic Sea. However, OEG Offshore’s oil and gas footprint is wider still.
“We work in Mexico, we work in New Zealand, we work in Canada, Angola, Namibia, all of these different countries. Namibia being the new, exciting place to go in oil and gas. We’re working on all the new explorations down there, which has been a good market for us,” says Heiton.
Trump and energy
The firm’s international spread gives it a unique perspective on global headwinds. But he shrugs off concern about the the return of President Donald Trump, who has pledged to kill America’s nascent offshore wind industry on “day one” back in office.
Heiton said it’s too soon to determine the effects the returning president’s policies will have on the energy markets in the US, but he believes that Biden-era investment trends are well established. And if Trump does succeed in derailing US some offshore renewables plans, the world will be ready to absorb the changes.
“It is very early days. These are very long run projects,” he said.
“The projects we work on generally take five to seven years between gestation to completion. Frankly, a president is in office is for four years, so it doesn’t make a huge impact I would say in the short term.
“It can make a bigger impact in a little bit longer term, but I don’t expect to see any huge changes.
“There is a shortage of installation vessels in wind so, frankly, if the US doesn’t use them they will go to other markets.
“Similarly if the US wants to drill more it is really hard to get a rig these days, where are you going to get it from is the trouble.”
But not everything is acquisitions, the firm is targeting organic growth as well.
The company has moved into a new headquarters in Aberdeen – “frankly we ran out of space at our previous one”, Heiton observes.
A seven-figure investment has secured a new global HQ at the Stratus Building in ABZ Business Park in Dyce.
“That is a good sign, investing, we are a renewables-weighted business based in Aberdeen. We’re trying to provide employment for people in the energy transition,” he said.
“We’re probably expecting to hire 100- 200 people every year for the next several years.”
Not all of these will be in Aberdeen, but some will be. Of the 300 new hires across global business in the last 12 months, the number of Aberdeen employees is up by 20% to circa 250.
The company is also focusing on its employee culture.
“We want to not just recruit people, but we also want to retain them. We are investing in some new hires to improve our HR department and boost our benefits packages.”
Work in renewables tends to be “project-oriented” which requires flexibility. But OEG also wants to be in a place to compete for talent.
“It is is not necessarily for everyone, and there’s a lot of poaching between companies,” he said.
“We want to be the employer of choice. I think we’ve got it, we are working on all the best projects, working a lot of different countries internationally. We can give people that real career for the long term in our business.”
The new Dyce headquarters is OEG’s sixth site in Aberdeen with operational bases in Bridge of Don, Dyce, Kintore and Portlethen.
“We now have six locations, but we probably land back down to five as we move around our real estate. But overall, our employee numbers are up.”
The investment reflects a firm commitment to Aberdeen as well as the North Sea as a key enabler of low carbon energy projects. It joins other new investments, including heavy lift firm Sarens PSG which recently revealed plans to open a £1.6m crane facility in the city thanks to the area’s proximity to offshore wind projects and the UK’s £8.3bn GB Energy.
Heiton said: “Obviously, the previous government wasn’t that supportive, and the new government is not particularly supportive of offshore oil and gas, but we are, luckily, more production-biased in what we do, rather than new investment.
“So we still see a reasonable, long term future in Aberdeen for the oil and gas business. As the wind farms start to get further north in Scotland, hopefully there’s more work here in our renewables business.”
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