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Permian Basin Mergers: C&J Energy Services and Keane Group Inc plan to merge

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Houston-based C&J Energy Services (NYSE: CJ) and Keane Group Inc. (NYSE: FRAC) P, creating a diversified oil field services provider valued at approximately $1.8 billion, including $255 million of net debt.

Get ready for layoffs folks, as is the case after most successful mergers are completed. Companies start removing redundancies in the field and in corporate offices and start focusing on synergies. Where does this leave Liberty oilfield?

Read more bellow about the all-stock Merger.

C&J Energy Services (“C&J”) (NYSE: CJ) and Keane Group, Inc. (“Keane”) (NYSE: FRAC) today announced that they have entered into a definitive agreement whereby the companies will combine in an all-stock merger of equals. The combined company will be positioned as an industry-leading, diversified oilfield services provider with a pro-forma enterprise value of approximately $1.8 billion, including $255 million of net debt.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies and the Special Committee of the Keane Board, C&J shareholders will receive 1.6149 shares of Keane common stock for each share of C&J common stock owned. The merger agreement permits C&J to pay its shareholders a cash dividend of $1.00 per share prior to closing. Upon closing, Keane and C&J shareholders will, in the aggregate, each own 50% of the equity of the combined company on a fully diluted basis. The share exchange is expected to be tax-free.

The merger of equals will create a leading well completion and production services company in the U.S., with increased scale and density across services and geographies with a prominent presence in the most active U.S. basins. Both C&J and Keane share a commitment to safety and integrity, employee development, partnerships with blue-chip customers, technological innovation, and strong community relationships, all of which will be reflected in the operations of the combined company. On a pro-forma basis, the combined company would have approximately $4.2 billion in net revenue and approximately $636 million in adjusted EBITDA for the 12 months ended March 31, 2019. In addition, the two companies anticipate to achieve annualized run-rate cost synergies of $100 million within 12 months after closing. With approximately $173 million in cash, or $106 million after the $1.00 per share cash dividend is paid to C&J shareholders, the combined company will have flexibility to invest in growth and technology and return capital to shareholders.

“The merger of equals unites two great companies, resulting in a broader portfolio of well completion services across an even greater footprint in the U.S., benefiting our combined employees, shareholders, customers, suppliers, and the communities in which we operate,” said Robert Drummond, Chief Executive Officer of Keane. “With two strong teams, enhanced and diversified operations, a strong balance sheet, ample liquidity, attractive free cash flow and a legacy of successful R&D, the combined company will be well positioned to further invest in technology and innovation, as well as the career development of our employees to drive sustainable growth in our dynamic industry. In C&J, we’ve found a partner who is equally committed to our strong employee culture with a focus on safety and customers, with whom we are eager to join forces to leverage our combined resources and strengths.”

Don Gawick, President and Chief Executive Officer of C&J, said, “This agreement to merge C&J and Keane underscores the highly complementary nature of our two platforms and cultures. We are excited by the many strategic and financial benefits of this combination, including the opportunities for our employees from the greater scale and enhanced capabilities of the combined company. For the customers and markets we serve, our people will continue to deliver the highest level of customer service with quality, safety, integrity and innovation. Given the shared safety focus and passion for excellence of our highly talented workforces, I am confident that the opportunity to leverage each other’s strengths will enable a combined organization where the sum of both parts makes a much greater whole. Alongside our talented Keane colleagues, we look forward to expanding and deepening our service capabilities, enhancing our relationships with blue-chip customers and generating long-term, sustainable shareholder value.”

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 Halliburton

The oil-rich Permian basin is slowing – Bad News For Halliburton?

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Halliburton is days away from reporting 2Q19 earnings, and a shift in the narrative regarding North America could be bad news for Halliburton. Why? Below we take a look.

  • High well-decline rates burning cash as investors stay away
  • Smaller producers fight to survive, bigger ones cutting back

The promise of the Permian is shrinking.

Producers in the nation’s oil-rich shale basins are dialing back growth plans in the face of a growing panoply of problems that’s killing returns and keeping skeptical investors at bay. – https://www.bloomberg.com

Zacks Consensus Estimates are projecting earnings of $1.33 per share and revenue of $24.23 billion, which would represent changes of -30% and +0.98%, respectively, from the prior year.

 

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Business

Consolidation In The Pressure Pumping Secture

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Having a quite-fleet might not be enough to survive in the ever-volatile pressure pumping sector. As the fracking companies push for more economically viable frac spreads, the competition is getting fierce. so seeing mergers in the pressure pumping industry is expected, as more companies try to focus on new technology and make their companies viable in the “New oilfield” sector.

That brings us to the Two Houston oilfield services companies that said would merge in an all-stock deal valued at about $2 billion.

“The merger of equals unites two great companies, resulting in a broader portfolio of well completion services across an even greater footprint in the U.S., benefiting our combined employees, shareholders, customers, suppliers, and the communities in which we operate,” Keane CEO Robert Drummond said in the statement.

It’s important to note this volatility is also one of the reasons millennials don’t like to work in the oilfield.

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