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Valuation for an Acquisition of an Oil & Gas Service Company in Indonesia

Muhammad Iqbal Sudirman, Kin Tjendrasa


When global crude oil price faced a significant downturn from 2015 – 2017, many oilfield service companies were struggling to survive. This condition is an excellent opportunity for more prominent oil & gas service companies to consolidate the market by having horizontal acquisitions, taking over the smaller oil & gas service companies, which may lead to a more profitable market with fewer competitors. This horizontal acquisition is one of the strategies that is commonly being incorporated as a growth plan for a company. National Petroleum Services (NPS), a Middle Eastern regional oil & gas service company, is trying to acquire another oil & gas service company which operates in Indonesia as part of its inorganic expansion strategy to Far East Asia region. Although several discussions have been conducted between the executives from both companies, unfortunately, there has not been any agreement was made on the expected transaction value. From the acquirer point of view, it is imperative to resolve the different point of views from both parties to proceed with the acquisition transaction within the specified time frame this year to swiftly enter the market and not missing out the ongoing project opportunities.

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