Aker Solutions — M&A Activity 2021

Jul 1, 2021

Aker Solutions and AF Gruppen Join Forces to Create a Leading Global Offshore Decommissioning and Recycling Company

Aker Solutions and AF Gruppen Join Forces to Create a Leading Global Offshore Decommissioning and Recycling Company

July 1, 2021 - Today, Aker Solutions and AF Gruppen have signed a Letter of

Intent (LOI) to merge the two companies' existing offshore decommissioning

operations into a 50/50 owned company with the goal of creating a leading global

player for environmentally friendly recycling of offshore assets. By

establishing a pure, focused player dedicated to unleashing global decom

potential, the parties will make a significant contribution towards a

sustainable, green transition of the offshore sector.

"By combining Aker Solutions' offshore, engineering and project execution

capabilities with AF Gruppen's decommissioning and construction capabilities, we

aim to increase customer efficiency throughout the decommissioning process and

maximize the total recycling potential. The company will be uniquely positioned

to offer integrated end-to-end services from well plug and abandonment to

planning, removal, dismantling and recycling at its own environmental base.

Sustainability and circular economy ambitions will be key focus areas for the

new entity, and we see increased activity in the market for decommissioning and

recycling moving forward," said Kjetel Digre, chief executive officer of Aker

Solutions.

"Our ambition is to establish a unique recycling player, positioned to offer a

total decommissioning solution for the global offshore recycling market. The two

parties have complementary strengths and capabilities, with potential to build a

global offshore recycling powerhouse. Furthermore, the new entity will deliver

on the green, circular ambitions outlined in the UN's sustainable development

goals," said Amund Tøftum, CEO of AF Gruppen.

A Roadmap to Circularity

The recycling of steel from decommissioned oil platforms represents a

significant contribution to reducing greenhouse gas emissions compared with

ordinary steel production. Goal 12 in the UN's sustainable development goals

(SDG) is to ensure sustainable consumption and production patterns. It is stated

that urgent action is needed to decrease our reliance on raw materials and

increase recycling and "circular economy" approaches to reduce environmental

pressure and impact. These goals will be met by viewing old structures as

material banks of dynamic and valuable resources, rather than fixed and final

objects.

Solving a Significant Societal Challenge

The business concept is based on solving a significant societal challenge by

removing and recycling decommissioned oil platforms. The unit aims to recycle as

much of the materials from the decommissioned offshore platforms as possible. In

recent years, AF Offshore Decom has achieved a source separation rate of 94

percent for the structures for recycling, where the main component is metal.

Reusing steel results in 70 percent less CO2 emissions than ore-based

production, which corresponds to an emission reduction of 1 kg CO2 per kilo of

recycled steel. In 2020, AF Offshore Decom demolished and facilitated the

recycling of approximately 22,000 metric tons of steel, corresponding to a

reduction of alternative CO2 emissions of 22,000 metric tons.

Global Reach Based on Norwegian Competence

Decommission of the offshore market has a vast untapped potential globally, with

approximately 10,000 operational platforms. The North Sea alone holds a

significant potential with expectancy of more than 900,000 metric tons of top

deck to be removed during the period from 2020 to 2029. This applies to the

British, Norwegian, Danish and Dutch sectors. Based on today's current annual

decommissioning spend, it implies that it will take operators approximately 100

years to deplete liabilities for current assets. Thus, a further ramp up of pace

is necessary, leading to a positive contribution to the demand for this type of

services.

Superior Execution Power and Capabilities

The two companies represent unmatched and complementary engineering and

construction capabilities, offshore and onshore. Jointly, the two units brings

extensive capabilities in running large-scale offshore projects, lifecycle and

value chain competence and a broad global portfolio of customers and projects.

The joint company will have an order backlog of approximately NOK 2.5 billion.

The transaction is expected to be completed during the second half of 2021 and

is subject to due diligence and regulatory approvals by the Norwegian

Competition Authorities (NCA).

ENDS

Media Contact:

Odd Naustdal, mob: +47 905 76 079, email: odd.naustdal@akersolutions.com

Investor Contact:

Fredrik Berge, mob: +47 450 32 090, email: fredrik.berge@akersolutions.com

AF Gruppen is a leading contracting and industrial group that was formed by an

entrepreneurial spirit and execution capabilities. The group has 5,500 employees

and revenue reached NOK 27 billion in 2020. AF Gruppen is listed on Oslo Stock

Exchange (AFG). We provide a broad range of services with seven operational

business areas: Civil Engineering, Building, Betonmast, Property, Energy and

Environment, Sweden and Offshore. www.afgruppen.com

Aker Solutions delivers integrated solutions, products and services to the

global energy industry. We enable low-carbon oil and gas production and develop

renewable solutions to meet future energy needs. By combining innovative digital

solutions and predictable project execution we accelerate the transition to

sustainable energy production. Aker Solutions employs approximately 14,000

people in more than 20 countries.

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This press release may include forward-looking information or statements and is

subject to our disclaimer, see https://akersolutions.com

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to Section 5-12 the Norwegian Securities Trading Act.

This stock exchange release was published by Lars Kulsrud, Senior Manager,

Communications, Aker Solutions, on July 1, 2021 at 08:00 CEST.