NACG Secures Major Regional Contract for Oil Sands Operations

NACG Secures Major Regional Contract for Oil Sands Operations

ACHESON, Alberta — North American Construction Group Ltd. (NACG) (TSX:NOA/NYSE:NOA) has recently shared exciting news regarding a significant regional services contract awarded by a prominent oil producer in the Canadian oil sands. This contract not only extends the duration of their service agreement but also outlines the company's outlook for the year 2025 and updates financial estimates for the closing quarter of 2024.

Details of the Regional Services Contract

The newly extended and amended contract involves the provision of comprehensive services across several mine sites managed by the producer. Starting January 1, 2025, this contract will now run until January 31, 2029, demonstrating a long-term commitment to collaboration.

This agreement includes a committed expenditure of $500 million, which largely pertains to heavy equipment rentals and encompasses various earthwork operations. These substantial volumes will account for roughly one-third of the total work anticipated across the mine sites. Such tasks range from overburden removal and reclamation to civil construction and other heavy machinery applications.

Joe Lambert, the President and CEO of NACG, expressed enthusiasm about the contract. He commented, “This multi-year commitment is our first under this contract. We are eager to meet our customer's expectations by delivering safe and efficient services. This award highlights our alignment with our client's operational objectives, alongside our dedication to cost efficiency.”

Jeff Epp, the Interim CEO of Mikisew Group, also emphasized the value of this partnership. He stated, “We are proud to enhance our role within this partnership through this contract extension, reflecting our commitment to deliver outstanding value and sustainable growth. Our collaboration with NACG enhances our capacity to serve our clients effectively and underlines our promise to support the Mikisew Cree First Nation's economic development.”

Anticipated Outlook for 2025

With this award in place, along with a projected contractual backlog totaling $3.6 billion, NACG's management has released forecasts for key operational measures and capital allocation for the fourth quarter of 2024 and the entirety of 2025.

Key Measurements Overview

For the fourth quarter of 2024, the combined revenue is set to range between $350 million and $375 million, while for the full year of 2025, estimates suggest it will rise significantly to between $1.4 billion and $1.6 billion. Adjusted EBITDA for 2024 is projected to be between $100 million and $110 million, and for 2025 it could reach between $415 million and $445 million, indicating positive growth prospects.

Capital Allocation Insights

The planned capital allocation includes growth spending estimated at $30 million to $40 million for early 2025, investing in the contracts received in the latter half of 2024. They also aim to continue share purchases under the existing normal-course issuer bid program, focusing on delivering economic returns to shareholders.

Lambert elaborated on the year ahead, noting that it marks a significant culmination of the past few years' growth, stating, “With a solid contracted backlog, we have the necessary resources—equipment and personnel—to conduct effective operations across Canada, Australia, and the United States for the coming year.”

About NACG

NACG stands as one of the largest providers of heavy construction and mining services in Canada and Australia. For over seven decades, the company has offered exceptional services in the mining, resource, and infrastructure construction sectors.

About Mikisew Group

As the Independent Economic Development entity of the Mikisew Cree First Nation, Mikisew Group, together with its partnerships, provides essential services in the Canadian oil sands industry, extending its capabilities in heavy equipment rental, fleet maintenance, and more.

Frequently Asked Questions

What is NACG's new regional services contract about?

NACG's new contract involves providing comprehensive services to a major oil producer in the Canadian oil sands, extending until January 31, 2029.

How much is the financial commitment of the new contract?

The financial commitment of the extended contract is approximately $500 million over its duration.

What are NACG's revenue expectations for 2025?

NACG anticipates a combined revenue between $1.4 billion and $1.6 billion for the year 2025.

Who is NACG partnering with for this contract?

NACG is collaborating with a major oil producer and the Mikisew Group through this contract extension.

How does NACG aim to improve shareholder value?

NACG plans to enhance shareholder value through continued share purchases and strategic investments as part of their normal-course issuer bid program.

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