Park Energy Services Partners With Chesapeake Following Midcon Compression Acquisition

Park Energy Services LLC recently partnered with Chesapeake Energy Corporation (NYSE: CHK) to meet the Oklahoma City-based E&P’s compression needs, the Rock Hill Capital portfolio company said Oct. 31.

The partnership follows the acquisition by Park of substantially all the assets of Midcon Compression LLC, a division of Chesapeake, for an undisclosed amount.

The transaction included a large facility in Hinton, Okla., and a fleet of natural gas compressors used primarily in artificial lift, wellhead compression, and gathering applications. All Midcon personnel will be joining the Park team.

The acquisition increases Park’s total compression fleet to over 150,000 horsepower while expanding on the company’s strategic position in the Midcontinent and South Texas regions.

The acquired fleet consists primarily of three-stage, high-pressure gas lift compressors which will enable Park, also based in Oklahoma City, to take advantage of “substantial demand” for gas lift compression with new and existing customers, according to the company press release.

In connection with the transaction, Park said it entered into a multi-year agreement with Chesapeake to serve as a strategic local compression provider. The company said it will also allow Chesapeake to unlock value by shedding ancillary assets.

The announcement came a day after Chesapeake’s multibillion-dollar acquisition of WildHorse Resource Development Corp. (NYSE: WRD). The transaction, worth nearly $4 billion, is expected to make Chesapeake an Eagle Ford oil producing powerhouse.

Founded in 2014, Park specializes in compressor technology that helps oil and natural gas producers increase well-production volume while simultaneously reducing emissions and complying with environmental rules and regulations.

“Our units are capturing gas that would otherwise be burned or vented and putting that gas on the sale line,” Jonathan Mitchell, president and CEO of Park, said in a statement.

Moving forward, Mitchell said Park’s expanded rental and service offerings could help companies like Chesapeake focus on developing core assets.

“By letting us provide the compression services and equipment, these companies are saving themselves from the expense of managing and maintaining a serviceable fleet,” he said. “That frees them up to invest in and develop their core, profit-making assets. It’s a win-win scenario for Park and our customers.”

Debt financing was provided by Regions Bank and BMO Harris Bank NA. Legal representation services for the transaction were provided by Winston & Strawn.

Rock Hill Capital is a private equity firm headquartered in Houston that that invests in small-to-lower middle market companies located in the South and Southeast U.S. The firm, founded in 2007, is currently investing out of its third committed capital fund totaling $150 million focusing on companies in the industrial products and services industries.