Source: Archer Limited
Archer Limited (OSE:ARCHER) signed a definitive Purchase and Sale Agreement for the acquisition of all the operating companies of hydraulic fracturing firm Great White Energy Services, a company formed by Wexford Capital LP, in a transaction valued at US $742 million on a cash and debt free basis.
Great White provides industry-leading pressure control including coil tubing and snubbing services, directional drilling, and pressure pumping including fracing and nitrogen services. Its operations are primarily focused on the US onshore unconventional resource plays with locations in many of the prolific basins with strong drilling activity, primarily with an oil and liquids focus. Great White's services are targeted at drilling and completing the horizontal wells that are critical in increasing the ultimate recovery in unconventional basins.
Great White operates 13 service centers strategically located around the unconventional plays in Michigan, Oklahoma, Texas, West Virginia, Colorado, Arkansas and Wyoming and are highly complementary to Archer's existing locations with minimal overlap and integration risk. Archer's new pressure pumping division and its expanded pressure control divisions will be headquartered in Oklahoma City.
We believe that this transaction will benefit from strong macro trends in the oil and gas industry including a continued rise in horizontal well drilling, higher service intensity with a continued growth in demand for fracturing services combined with increased onshore focus from major integrated oil and natural gas companies in particular in unconventional resource plays both in the US and internationally. We also believe that the combination of Archer and Great White is highly complementary and will provide a complete service offering in the fast growing unconventional oil and gas market servicing all major unconventional resources in the United States. It will also give Archer the ability to bring these services to existing Archer strongholds overseas and to international plays with similar reservoir characteristics.
Great White's assets include over 40 quintuplex high pressure fracturing units capable of delivering over 100,000 hydraulic horsepower, 11 coiled tubing units, 23 snubbing units, 16 nitrogen pumping units, 13 fluid pumping units, 6 wireline units, 49 MWD kits, 4 EM kits and 392 motors. All three divisions are currently undergoing capital expansion plans which will lead to an increased fleet of equipment at year end 2011. Great White has made significant recent capital expenditures to increase the size of its asset base and provide its customers with new and efficient equipment. As a result of this transaction, Archer will double the size of its existing Coiled Tubing and Directional Drilling business and add a hydraulic pressure pumping division that has 100,000 HHP currently and will have 140 000 HHP by first quarter 2012.
Archer to buy Great hydraulic fracturing firm White Energy Services for $742MM
Source: Archer Limited