KLX Energy Services Holdings Inc. (NASDAQ: KLXE) said Oct. 22 it will enter the coiled tubing market through the acquisition of Motley Services LLC in a cash-and-stock transaction worth $148 million.
Motley Services is a provider of well completion services in the southwestern region of the U.S. with headquarters in the heart of the Permian Basin in Odessa, Texas. The company is primarily focused on providing high-quality large diameter coiled tubing services specializing in complex, longer lateral horizontal wells, in addition to wireline and thru-tubing services.
The acquisition of Motley will add large diameter coiled tubing services initially into KLX’s Southwest region, but the Wellington, Fla.-based company plans to eventually roll it out to the rest of its geographic regions, said Amin J. Khoury, the company’s chairman, CEO and president.
“The acquisition of Motley represents an entry into the coiled tubing market for KLXE, and significantly strengthens the company’s current portfolio of well completion services,” Khoury said in a statement.
Motley’s wireline and thru-tubing services are also complementary to KLX’s existing service offerings, according to the company press release.
KLX is an oilfield service company based in Wellington, Fla., with over 35 service facilities located in key U.S. shale basins, including the Permian Basin, Eagle Ford, Rockies, Bakken, Marcellus, Utica and Midcontinent. The company focuses on completion, intervention and production activities for “the most technically demanding wells,” the KLX release said.
Under the terms of the agreement, KLX Energy Services will pay Motley $139 million in cash and $9 million of KLX common stock. The company plans to fund the cash portion with the net proceeds of a $250 million debt financing.
Khoury said the acquisition price represents a multiple of about 3.2 times the mid-point of Motley’s third quarter 2018 EBITDA guidance, on an annualized basis.
Motley’s third-quarter 2018 revenues was about $136 million and its EBITDA guidance was $46 million, both on an annualized basis based on the mid-point of the guidance, the release said.
The transaction is subject to certain closing conditions, including approvals from regulatory authorities. Khoury said he expects KLX to close the acquisition by late October or early November and for it to be “strongly accretive to KLX Energy Services earnings in 2018 and 2019.”
Freshfields Bruckhaus Deringer US LLP is KLX’s legal counsel. Simmons & Co. International, energy specialists for Piper Jaffray, are the exclusive financial adviser to Motley and Locke Lord LLP is the company’s legal adviser.