QES and Archer’s North American Well Services Entities to combine in stock transaction

Quintana Energy Services LP (QES), a portfolio company of Quintana Energy Partners LP (Quintana), and Archer Well Co. Inc. (AWC), a subsidiary of Archer Ltd. (OSLO: ARCHER), have a definitive agreement under which AWC will contribute all outstanding shares of Archer Pressure Pumping LLC, Archer Directional Drilling Services LLC, Archer Wireline LLC, and Great White Pressure Control LLC (collectively the “Archer Well Services Entities”) to QES in exchange for equity in QES.

QES operates in the US onshore oilfield services industry through its subsidiaries, Directional Drilling Co. (DDC) and Consolidated Oil Well Services (Consolidated), the directional drilling and completion services business units of QES, respectively. Upon the completion of the transaction, Archer will receive QES common units representing approximately 42% of the pro forma limited partner interest in QES.

Rogers Herndon, CEO of QES, said, “We are pleased to announce this transaction with the Archer Well Services Entities to create a leading provider of onshore completion, production and directional drilling related services throughout the US. We believe this combination represents the type of consolidation that must occur across the oilfield services sector to address the challenges of the current market environment.”

On a pro-forma basis, the combined company had 2014 revenue of over $1.1 billion, 2014 adjusted EBITDA in excess of $178 million and currently has approximately 1,200 employees. The combined company will be headquartered in Houston, Texas.

Herndon stated, “The combination augments QES’ existing operations in pressure pumping, directional drilling and wireline, while adding complementary service offerings in coiled tubing and snubbing.”

Archer provides pressure pumping, directional drilling, wireline and pressure control, including coiled tubing and snubbing services. In addition to adding 850 highly skilled employees, the acquisition of the Archer Well Services Entities will significantly enhance QES’ asset base. The Archer Well Services Entities asset base includes 208,000 hhp of fracturing units, 23 coiled tubing units, 33 snubbing units, 23 nitrogen pumping units, 25 fluid pumping units, 78 wireline units, 57 directional kits, and 450 mud motors. Its operations are primarily focused on the US onshore unconventional resource plays.

On a pro forma basis, the combined entity will operate 408,000 hhp, 23 coiled tubing units, 33 snubbing units, 24 cementing units, 23 nitrogen pumping units, 25 fluid pumping units, 86 wireline units, 120 directional kits, and over 825 mud motors.

The transaction is subject to customary approvals, including regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close by year-end 2015.

Simmons & Co. International acted as exclusive financial advisor to QES and Quintana. QES and Quintana were advised on transaction legal matters exclusively by Vinson & Elkins LLP. Archer was advised exclusively by Bank of America Merrill Lynch and Andrews Kurth LLP on financial and legal matters, respectively.


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