KLX Energy Services Holdings Inc. picked up two oilfield service providers this week for roughly $82 million in acquisitions that KLX Energy Services CEO called “value-creating transactions” that led to the Houston-based company raising its guidance for the year.
The acquisitions included the purchase of Red Bone Services, a provider of non-frac high-pressure pumping, thru-tubing, fishing and certain other services primarily in the Midcontinent region. The company started operations in Elk City, Okla., in 2007 and has expanded to locations in the Appalachian and Permian basins, according to its website.
KLX Energy Services also picked up Tecton Energy Services, which provides flowback, drill-out and production testing services, operating primarily in the greater Rocky Mountains area. Based in Englewood, Colo., the company has been in business since 2012 and has several big-name clients such as EQT Corp., Oasis Petroleum Inc. and Continental Resources Inc.
Amin J. Khoury, chairman and CEO of KLX Energy Services, said the acquisitions fit into the company’s strategic priorities to grow its customer base and enhance its services.
Both companies have “very low” capital intensity and provide KLX with significant cross-selling opportunities, according to Khoury.
“The Red Bone acquisition provides KLX Energy Services with a substantially stronger geographical presence in the Midcon, along with important potential market synergies as we roll out our broad portfolio of services to Red Bone’s customers,” Khoury said in a statement on March 20.
Meanwhile, he said the addition of Tecton creates the opportunity to roll out Tecton’s flowback, filtration and testing services to KLX’s other geographic regions.
The combined acquisition price of Red Bone and Tecton was comprised of roughly 2.1 million shares of KLX common stock and $14.5 million in cash plus about $14.5 million for the retirement of debt. KLX Energy Services said it expects to realize annualized EBITDA synergies of roughly $12 million.
To reflect the acquisitions, KLX also raised its fiscal year 2019 guidance on March 20. The company now expects to generate revenues this year of $800 million, an increase of $50 million from its target announced earlier this month. Its adjusted EBITDA for 2019 also increased to $200 million from $190 million.
Raymond James Investment Banking advised Red Bone Services on the transaction.
Recommended Reading
E&P Highlights: April 29, 2024
2024-04-29 - Here’s a roundup of the latest E&P headlines, including a new contract award and drilling technology.
US Gas Rig Count Falls to Lowest Since January 2022
2024-03-22 - The combined oil and gas rig count, an early indicator of future output, fell by five to 624 in the week to March 22.
US Drillers Add Oil, Gas Rigs for First Time in Four Weeks: Baker Hughes
2024-05-17 - The oil and gas rig count rose by one to 604 in the week to May 17.
US Oil, Gas Rig Count Rises to Highest Since September: Baker Hughes
2024-03-01 - The U.S. oil and natural gas rig count is at its highest since September 2023.
US Drillers Cut Oil, Gas Rigs for Third Week in a Row
2024-04-05 - The oil and gas rig count, an early indicator of future output, fell by one to 620 in the week to April 5, the lowest since early February.