SAIC to Buy Oil Facility Design Firm

The deal is expected to close in August.
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Engineering and military contracting firm

SAIC

(SAI)

plans to acquire an Oklahoma City firm with expertise in designing and building oil and gas facilities.

SAIC said Friday that it will acquire

Benham Investment Holdings

, which is owned by senior employees and an outside group of private equity investors. Neither company would disclose financial terms of the deal.

Benham derives roughly 80% of its revenue from engineering design and construction of industrial facilities for oil refineries, chemical processing plants, university buildings, manufacturing sites, airport terminals and hangars, and water and power utilities.

Benham's greatest attraction to SAIC is its strength in designing and building production facilities for energy fuels.

"Benham's expertise in energy project design, implementation and monitoring and reporting, combined with SAIC's core capabilities in energy consulting, research and development and risk management, creates an end-to-end solution for the energy market," said Joe Craver, president of SAIC's infrastructure, logistics and product solutions group, in a statement.

The deal comes as light sweet crude oil prices are reaching nearly $73 a barrel for August delivery, up over 18% over the last six months. Traders expect prices to reach $78 a barrel this summer.

Benham's management structure will remain intact after the acquisition.

Both SAIC and Benham have long histories of working with the military and have employees with various levels of government clearance. SAIC

recently won a contract to handle hazardous materials for the Army and to operate an Air Force computer network.

Roughly 20% of Benham's revenue comes from federal contracts, which includes projects for the military, and the departments of Homeland Security and Energy. The company is current wrapping up work on the U.S. Army's new instructional campus at Fort Leavenworth, Kan., and the Marine's Atlantic command center in Norfolk, Va. The Army site includes a sophisticated audio-visual and computer network for combat simulations. The Marine facility includes a fully secured communications system to prevent electronic eavesdropping.

Acquiring Benham will take SAIC deeper into the energy business. Benham recently completed a $23 million project to design and build a special diesel fuel production plant for Holly Refining and Marketing. The Utah facility produces 10,000 barrels a day of ultra-low-sulfur diesel and jet fuel. In 2006, Lake Erie Biofuels chose Benham to design and build a $46 million plant to produce 136,000 gallons of biodiesel a day.

SAIC expects the deal to close in August, pending shareholder approval and an antitrust review.