Key Energy buys fracking company for $300MM

Source: Key Energy Services

Key Energy Services, Inc. (NYSE:KEG) has reached a definitive agreement to acquire Edge Oilfield Services, L.L.C. and Summit Oilfield Services, L.L.C. for a consideration of approximately $300 million. 

Edge primarily rents frac stack equipment used to support hydraulic fracturing operations and the associated flow back of frac fluids, proppants, oil and natural gas. It also provides well testing services, rental equipment such as pumps and power swivels, and oilfield fishing services. Following the close, Edge's results will be reflected within Key's existing Fishing & Rental Services line of business, which is included in its U.S. reportable segment.

The $300 million consists of approximately 7.5 million shares of Key common stock and approximately $164 million in cash, which is subject to working capital and other adjustments at closing. Key anticipates funding the cash portion of the consideration from available cash and borrowings under its credit facility. In addition to the $300 million of consideration, Key has also agreed to reimburse or fund up to $40 million of Edge's pre-closing capital expenditures related to Edge's expansion into the Eagle Ford shale, which began generating revenue this quarter. 

The closing of this transaction, which is expected to occur this quarter, is subject to customary conditions including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act. 

Key's Chairman, President, and CEO, Dick Alario, stated, "Edge's high performance frac stack equipment enjoys strong growth opportunities, particularly in unconventional shale markets. Furthermore, its high revenue and profit per employee fits with our overall investment strategy and should prove beneficial, especially in today's tight labor market."

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