Companies are partnering and consolidating fracking businesses in order to better position themselves to serve customers in the new normal of low oil and gas pricing.
In March, Trican Well Service announced its acquisition of Canyon Services in a stock-and-debt deal valued at $637 million, creating a larger and more prolific company.
“It’s the right time for the combination,” Dale Dusterhoft, Trican’s president and chief executive officer, told a conference call.
“We’re seeing an improvement in our business. We’re seeing a situation in our industry right now where horsepower-per-job is increasing rapidly, the sand-per-well is increasing rapidly, and these trends are putting a strain on both of our respective companies.
“This deal allows us to get to a scale that allows us to service our customers better, drive efficiencies in our business and really respond to the change to the market that we’re seeing.”
The combined company will boast 675,000 hydraulic horsepower of available fracking capacity, service bases spread across western Canada, and a suite of offered products and services across cementing, coiled tubing, nitrogen, industrial services and fluid management.
“Why do this?” Dusterhoft asked.
“It significantly strengthens our core business, and before we want to diversify our revenue stream, we want to strengthen our core business…. We do want to diversify our revenue stream, but doing this deal gives us the financial flexibility with a very, very good balance sheet to be able to do those other things down the road.”
Also in March, Weatherford and Schlumberger announced the creation of OneStim, a joint venture combining their North American land hydraulic fracturing pressure pumping assets, multistage completions and pump-down perforating businesses.
Weatherford will contribute its multistage completions portfolio, regional manufacturing capability and supply chain for 70 per cent of the joint venture. Schlumberger will scoop up the remaining 30 per cent, adding access to its surface and downhole technologies, efficient operational processes and advanced geo-engineered workflows. The company will pay Weatherford a one-time sum of $535 million.
Both these partnerships follow Baker Hughes’ announcement last November that it will be joining forces with CSL Capital Management and West Street Energy Partners (WSEP) to create a pure-play North American land pressure-pumping company.
Baker Hughes and CSL will mesh their North American land cementing and hydraulic fracturing businesses, including personnel, expertise, technology and infrastructure to form the new company. CSL and WSEP will together contribute $325 million in cash, of which $175 million will be used to strengthen the new company’s balance sheet and position it for growth, and the other $150 million will go to Baker Hughes.
Headquartered in Tomball, Texas, the new company will operated as BJ Services. CSL and WSEP will together own 53.3 per cent, and Baker Hughes will have the remaining 46.7 per cent.
“With the combination of the Baker Hughes North American land cementing and hydraulic fracturing assets and our Allied Energy Services’ fracturing and cementing businesses, we are excited to create a leader in the pressure pumping sector and to operate under the well-regarded BJ Services name, which for almost 150 years has stood for superior and timely service to its customers and to the market,” says Charlie Leykum, founding partner of CSL.