Augean (LON:AUG) has announced a partnership with the Port of Dundee to treat hazardous waste arising from the growing market for oil and gas platform decommissioning. While we only increase our 2018 group operating profit forecasts by 2.5% to reflect the new venture, we are positive about the scale of the opportunity for energy infrastructure decommissioning (decom) as North Sea production assets reach the end of their lives. Augean’s unique ability to offer integrated hazardous waste treatment and disposal places it in a strong position to benefit from this market as it develops in the years and decades ahead.
Shift to decommissioning welcomed by shareholders
On 14 November Augean announced that it had entered into a partnership with the Port of Dundee to open a specialist waste facility for offshore energy decommissioning projects. The move is consistent with Augean’s strategy in its Augean North Sea Services (ANSS) unit of diversifying away from oil drilling-related waste, which has declined in tandem with falling North Sea oil production. The 24% rally in the share price since the news is, we believe, a reflection of market support for the strategic shift to decommissioning waste, a potentially lucrative growth market.
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