Logan International Eyes Xtend Energy Services

To acquire proprietary tool company providing products to downhold horizontal drilling industry predominantly in Canada.

Logan International Inc., Calgary, (Toronto: LII) plans to acquire Okotoks, Alberta-based Xtend Energy Services Inc. for C$39 million in cash and up to C$14 million in additional payments for a total C$53 million.

Logan will acquire all shares of Xtend for C$39 million, and make an additional payment of up to C$3 million based on Xtend's earnings for the 12-month period ending Jan. 31 exceeding an agreed upon threshold, and a further additional payment of up to C$11 million based on Xtend's earnings for the 12-month period ending December 31, 2012 exceeding an agreed upon threshold.

Xtend has developed a proprietary tool that enhances horizontal drilling effectiveness by introducing a variable frequency into the drill string that is designed to mitigate the effects of well-bore friction. Xtend introduced the tool into the Canadian market in 2004 and has experienced solid customer acceptance and growth. Although the tools currently are used predominantly in Canada, Xtend expects to expand into the U.S. market in the first quarter of 2012.

Logan chief executive David Barr says, “We believe the acquisition of Xtend will enhance our reputation of being a leading worldwide supplier of downhole products and services to the energy industry and will expand our presence into the drilling segment of the industry. We further believe the Logan sales and distribution infrastructure will accelerate Xtend's entry into the U.S.”

Xtend CEO Robert Russell says, “We are excited to join the Logan family of companies and look forward to the synergies this combination will bring."

Logan expects to fund the transaction from the proceeds of a new senior credit facility.

The transaction is expected to close by Feb. 29.