Calfrac Acquires All Assets Of Mission Well Sevices
To acquire all of the operating assets of the privately-held hydraulic fracturing and coiled tubing services provider.
Calfrac Well Services Ltd. (TO: CFW) entered into a definitive agreement with Mission Well Services LLC to acquire all of the operating assets of the privately-held hydraulic fracturing and coiled tubing services provider focused in the Eagle Ford shale region of Texas for $147 million.
The total purchase price includes $7 million of working capital associated with the ongoing operations of the business. The purchase price is approximately equal to the net book value of the assets and represents a discount to replacement value.
The acquisition will preempt a portion of Calfrac's 2014 capital expenditure program, which is expected to include similar equipment. Calfrac will acquire 157,500 of conventional pumping horsepower, along with high-rate blenders, related sand-handling and auxiliary equipment, three deep capacity coiled tubing units with related fluid and nitrogen pumping units and a modern district facility in San Antonio.
As part of the acquisition, Calfrac will gain a foothold in the Texas market with the addition of locations in Houston, San Antonio and Fairfield, Texas. Calfrac is assuming certain commitments with key suppliers of Mission and will be offering employment to a significant portion of Mission's employee base in order to continue to serve Mission's customers following the completion of the acquisition. Calfrac intends to transfer a portion of the assets to other active operating areas in the U.S., and Calfrac's geographic diversification will allow it the flexibility to redeploy other assets as opportunities arise.
"The acquisition of the operating assets of Mission is consistent with Calfrac's strategy of disciplined expansion through attractive acquisitions at good valuation metrics and through organic growth opportunities. Mission provides a platform for Calfrac to enter the Eagle Ford shale region and to assess opportunities in other basins in Texas, while adding high quality fracturing and coiled tubing equipment to other Calfrac operating areas," Doug Ramsay, Calfrac CEO, said in the release.
"We think the transaction is an exciting development for our team at Mission and it is the culmination of three years of hard work, from inception as a greenfield development to a thriving, multi-district pressure pumping company. We look forward to introducing Calfrac to our customers and vendors in the Eagle Ford and surrounding markets," Charlie Leykum, chairman of Mission and founder of CSL Capital Management LLC, said in the release.
Calfrac will fund the acquisition through its existing credit facilities which provide ample flexibility to finance the transaction. Maintaining a strong balance sheet remains a core principle of Calfrac, which has enabled it to proactively pursue acquisition opportunities such as Mission.
Subsequent to the acquisition, Calfrac will have some 1.2 million of conventional pumping horsepower, placing it among the world's largest and most capable fracturing companies.
The agreement contains customary terms and conditions for a transaction of this nature, including a prohibition upon Mission from participating in any discussion concerning any other similar transaction for the sale of the assets or the business of Mission. The acquisition is expected to close in early October.
Peters & Co. Ltd. and RBC Capital Markets are joint financial advisors to Calfrac.
Calfrac Well Services Ltd. provides specialized oilfield services in Canada, the U.S., Russia, Mexico, Argentina, and Colombia. The company is headquartered in Calgary.