HOUSTON--(BUSINESS WIRE)--Quintana Energy Services LP (“QES”), a portfolio company of Quintana Energy Partners, L.P. (“Quintana”), and Archer Well Company Inc. (“AWC”), a subsidiary of Archer Limited (OSLO: ARCHER, “Archer”), today announced 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 Company (“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, Chief Executive Officer 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 United States. 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.
Mr. 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. With the benefits from added scale, meaningful operating efficiencies and a solid balance sheet, we are positioning the platform to effectively manage the current industry downturn and capitalize on opportunities as the North American market improves. While we will be diligently focused on integrating the Archer Well Services Entities, QES will continue to explore strategic opportunities to further enhance our platform and accelerate our long-term growth strategy.”
David King, Chief Executive Officer of Archer, commented, “The improvements we have made in the Archer Well Services Entities over the past year were a clear demonstration of the capabilities this business has. Its dedicated and hardworking employees are an asset to any company, and I am proud of what we have achieved as a result of their contribution. I am excited about the potential of the combined company to better serve customers, provide additional avenues for growth and create further opportunities for our people to advance.”
Archer is a leading provider of 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 208,000HHP 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 U.S. onshore unconventional resource plays.
On a pro forma basis, the combined entity will operate 408,000HHP, 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.
Chris Baker, Chief Operating Officer of QES, stated, “We are excited to welcome the employees of the Archer Well Services Entities to the QES family, and we look forward to integrating our operations to deliver an expanded and enhanced service offering to our customer base.”
In conjunction with the transaction, QES will amend its revolving credit facility. Keefer Lehner, Vice President of Finance and Corporate Development, said, “We are extremely appreciative of our Amegy-led bank group’s support in consummating this transaction. The flexibility afforded to us under our amended credit facility positions the combined company to navigate the current market downturn, integrate the Archer Well Services Entities and emerge as a leader in our industry.”
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 & Company 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.
QES is a growth-oriented company providing a wide range of completion, production and drilling services to onshore E&P customers operating in unconventional resource plays and conventional basins throughout the U.S. QES operates via two subsidiaries, Consolidated and DDC. Consolidated provides frac, cementing, acidizing, wireline, water heating and transfer and CO2 product sales and transportation services. DDC provides directional and horizontal measurement-while-drilling services, downhole navigational and rental tools, and associated support services.
Formed in 2011, Archer is a Norwegian-based global oilfield service company with more than 40 years’ experience, over 7,000 employees and operations in more than 100 locations worldwide. From drilling services, production optimization, well integrity and intervention decommissioning, Archer is focused on safely delivering the highest quality services and products to the drilling and well services markets.
Founded in 2005 by Quintana Capital Group L.P., Quintana is a leading Houston, TX-based private equity firm focused on making control-oriented investments across the oil and natural gas, coal and power industries. The group manages $1.0 billion in original capital commitments across two funds.