[Context: On October 25, White Deer Energy announced an agreement to sell O-Tex Holdings, an oilfield cementing services company, to C&J Energy Services, Inc. (NYSE: CJ) for $132.5m in cash and 4.42m shares (~$110m) of common stock. Further details, advisors and related links are below.]
C&J Energy Services to Acquire O-Tex Holdings, Inc.
Accelerates Growth of Cementing Services to One of the Largest U.S. Land Providers and Enhances Well Construction, Intervention & Completions Platform; Conference call scheduled for Thursday, October 26, 2017 at 10:00 a.m. CDT
HOUSTON, Oct. 25, 2017 /PRNewswire/ — C&J Energy Services, Inc. (“C&J” or the “Company”) (NYSE: CJ) today announced that it has entered into a definitive agreement to acquire O-Tex Holdings, Inc. and its operating subsidiaries, including O-Tex Pumping, L.L.C. (“O-Tex”). O-Tex is majority owned by White Deer Energy L.P. Founded in 2007, O-Tex is the fourth largest provider of oilfield cementing services in the U.S. based on internal data and industry sources. This combination will significantly expand C&J’s cementing business with enhanced capabilities and strengthen the Company’s position as a leading oilfield services provider with a best-in-class well construction, intervention and completions platform.
Under the terms of the agreement, C&J will acquire all of the outstanding equity interests of O-Tex in a cash and stock transaction, with consideration comprised of $132.5 million in cash, subject to certain customary purchase price adjustments, and approximately 4.42 million shares of C&J’s common stock. The cash component will be funded with cash on hand. The acquisition is expected to be completed by the end of 2017, subject to standard regulatory approvals, including termination or expiration of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and satisfaction of customary closing conditions.
O-Tex specializes in both primary and secondary downhole specialty cementing services in most major U.S. shale plays. O-Tex is now the second largest provider of cementing services in West Texas based on internal data and recently opened its newest facility in Pecos, Texas to meet growing customer demand in the Delaware Basin. Additionally, through both acquisitions and organic growth, O-Tex has established a sizable presence in the Mid-Continent, the Rocky Mountains and the Northeast. With eight field offices, eight lab facilities and one of the youngest fleets in the industry, O-Tex maintains a diversified customer base consisting mostly of large independent exploration and production operators, which will both complement and expand C&J’s existing customer base.
C&J’s President and Chief Executive Officer, Don Gawick, commented, “We are excited to accelerate the growth of our well construction and intervention services business with the acquisition of O-Tex, an industry leading cementing services provider, in a strategic transaction that will immediately transform our cementing services into one of the largest and most competitive in the U.S. The addition of O-Tex to our portfolio advances several of our key strategic goals and strengthens our capabilities as one of the most geographically diverse and technologically advanced providers of well construction, intervention and completion services in the U.S. This transaction meets our criteria for strategic growth in that it expands the scale, geographic reach, and customer base of a core service line, notably at a time when our existing cementing assets are operating at full capacity. Additionally, we are meaningfully growing this business while maintaining a strong balance sheet and positioning the Company to capitalize on further growth opportunities. O-Tex is also expected to be immediately accretive to both our earnings and cash flow.
“Importantly, C&J and O-Tex share a common culture, values and vision, including a strong commitment to excellence in everything we do – making this combination a strong fit. Additionally, O-Tex’s operating philosophy and business objectives closely mirror C&J’s, which should result in a seamless integration and deliver increased value to our expanded customer and employees bases. We are excited about what lies ahead for our greatly enhanced cementing services business, and we look forward to welcoming the O-Tex team into the C&J family and joining with them to continue to deliver the highest quality service to our customers safely, efficiently and with operational excellence.”
Evercore Group L.L.C. acted as financial advisor and Vinson & Elkins L.L.P. acted as legal advisor to C&J. Locke Lord L.L.P. acted as legal advisor to O-Tex.
C&J’s management team will hold a conference call on Thursday, October 26, 2017 at 11:00 a.m. Eastern Time (10:00 a.m. Central), to discuss this transaction. To participate on the call, dial 1-855-560-2574 at least 10 – 15 minutes before the scheduled start time to avoid delays entering the conference call and ask for the C&J Energy Services O-Tex Holdings, Inc. Acquisition Conference Call. A telephonic replay will be available through November 2, 2017 and may be accessed by calling U.S. (Toll Free) 1-877-344-7529 or International 1-412-317-0088 using the access code 10113877. Additionally, the call will be available live via webcast that can be accessed through the investor relations section of our corporate website at www.cjenergy.com.
A presentation about the transaction that will be referenced on the call will be posted in the investor relations section of our corporate website prior to the call at www.cjenergy.com.
About C&J Energy Services
C&J Energy Services is a leading provider of well construction, well completion, well support and other complementary oilfield services to oil and gas exploration and production companies. We offer a comprehensive, vertically-integrated suite of services throughout the life cycle of the well, including fracturing, cased-hole wireline and pumping, cementing, coiled tubing, directional drilling, rig services, fluids management, artificial lift and other well support services. We are headquartered in Houston, Texas and operate in all active onshore basins of the continental United States and Western Canada.