Oil States International Inc. (NYSE: OIS) is expanding its well completions business in key U.S. shale plays with an $85 million acquisition of Falcon Flowback Services LLC, the Houston-based company said Feb. 28.
The acquisition comes as oilfield service M&A continues to heat up providing the industry with much-needed consolidation, said equity research analysts from Tudor, Pickering, Holt & Co. (TPH), which noted that Oil States purchase of Falcon shouldn’t come as a surprise “for those paying close attention.”
The Falcon deal follows Oil States’ recently completed $525 million acquisition of downhole tool provider GEODynamics Inc. in January. Oil States expects the addition of Falcon will provide “greater scale and access to highly-trained field technicians in a tightening labor environment,” Cindy B. Taylor, Oil States’ president and CEO, said in a statement.
Falcon is a full-service provider of flowback and well testing services for the separation and recovery of fluids, solid debris and proppant used during hydraulic fracturing operations. Based in Oklahoma City, the company has seven service locations and more than 400 employees throughout the U.S.
Oil States acquired Falcon on a cash-free and debt-free basis from Tulsa, Okla.-based Argonaut Private Equity. The acquisition was funded using borrowings under Oil States’ revolving credit facility.
“Given the funding vehicle and the valuation gap, this deal should be nicely accretive for Oil States. The target is also levered to an increasingly important piece unconventional well completion/production pie as flowback job sizes and frequency both continue to increase,” TPH analysts said in a morning note on March 1.
Argonaut, a middle market private equity firm, had acquired Falcon in November 2015 to serve as a growth platform for the company. As a result of the partnership, Falcon was able to expand its presence into “nearly every major oil and gas basin in the Lower 48 and significantly increased its asset base” with the strategic acquisitions of Erick Flowback Services and Rod’s Production Services in April 2016, according to an Argonaut press release.
Simmons & Co. International, energy specialists of Piper Jaffray, was Falcon and Argonaut’s exclusive financial adviser and Frederic Dorwart, Lawyers PLLC provided the companies with legal advice during the sale process.
Recommended Reading
ONEOK CEO: ‘Huge Competitive Advantage’ to Upping Permian NGL Capacity
2024-03-27 - ONEOK is getting deeper into refined products and adding new crude pipelines through an $18.8 billion acquisition of Magellan Midstream. But the Tulsa company aims to capitalize on NGL output growth with expansion projects in the Permian and Rockies.
Tivoli Midstream Buys Southeast Texas Coast Infrastructure
2024-04-29 - Tivoli Midstream acquired the Chocolate Bayou from Ascend Performance Materials, including storage and land for development.
Enbridge Closes First Utility Transaction with Dominion for $6.6B
2024-03-07 - Enbridge’s purchase of The East Ohio Gas Co. from Dominion is part of $14 billion in M&A the companies announced in September.
Global Partners Buys Four Liquid Energy Terminals from Gulf Oil
2024-04-10 - Global Partners initially set out to buy five terminals from Gulf Oil but the purchase of a terminal in Portland was abandoned after antitrust concerns were raised by the FTC and the Maine attorney general.
SCF Acquires Flowchem, Val-Tex and Sealweld
2024-03-04 - Flowchem, Val-Tex and Sealweld were formerly part of Entegris Inc.