Keane Group Inc. has entered into an agreement to acquire RockPile Energy Services LLC, a provider of completion services. Once completed, the transaction will result in an increase in the size of Keane’s fleet, one of the largest and most modern pressure pumping fleets in the United States, by 26% with approximately 1.2 million total hydraulic fracturing horsepower strategically located across the most prolific US shale basins.
Under the terms of the agreement, Houston, TX-based Keane will acquire all issued and outstanding shares of RockPile in a cash and stock transaction. Fixed cash and stock consideration, based on the current trading price of Keane’s common stock and subject to certain purchase price adjustments, is approximately $284.5 million, comprised of (i) $135 million in cash, (ii) approximately 8.7 million shares of Keane’s common stock and (iii) approximately $26.5 million for capital expenditures (including $9 million in deposits previously paid by RockPile and to be reimbursed by Keane at closing) for 30,000 previously ordered hydraulic fracturing horsepower. The new horsepower is expected to be delivered and deployed to the Bakken in the fourth quarter of 2017 under a dedicated agreement with an existing customer.
The $135 million cash component of the acquisition, the $9 million capital expenditure reimbursement and fees and expenses will be funded with $135 million of additional term loans, together with cash from Keane’s balance sheet. The remaining $17.5 million of the $26.5 million total capital expenditures for the new horsepower will be funded by operating cash flow throughout the build cycle.
Further, subject to certain conditions, the agreement includes contingent consideration of up to $20 million (or $2.30 per share of common stock issued to the sellers in the transaction) through a contingent value right if the trading price of Keane’s common stock is less than $19.00 a share during a trading period ending on the nine-month maturity date of the right.
The acquisition is expected to be completed by July 31, 2017, subject to standard regulatory approvals and satisfaction of customary closing conditions.
Founded in 2011, Denver, CO-based RockPile is an integrated provider of completions services, primarily providing hydraulic fracturing solutions with integrated wireline in the prolific Bakken and Permian basins. The company also provides workover and remedial well service and cementing. RockPile owns 245,000 hydraulic fracturing horsepower, 8 wireline trucks, 12 workover rigs and 10 cement units. RockPile’s completion assets are currently 100% utilized and deployed under market responsive agreements with high quality customers.
RockPile’s total fleet of 245,000 hydraulic fracturing horsepower includes 30,000 horsepower of Tier 4 units previously ordered by RockPile and scheduled for delivery in the fourth quarter of 2017. The company’s active hydraulic fracturing horsepower of 215,000 HHP is currently deployed approximately 50% each in the Bakken and the Permian.