Superior Energy Services has announced that it will merge its US completions business with Forbes Energy Services in an all-stock transaction. The combined entity will then be spun off into a publicly-traded company. It will have its headquarters in Houston.
Superior operates in four segments: Drilling Products and Services, Onshore Completions and Workover services, Production Services and Technical Solutions. It has its head office in downtown Houston. Like many oilfield service companies, it has been suffering from a high debt load. Net debt was about $1 billion at September.
Forbes is also a US completions business with its head office in Alice, Texas. The business filed for Chapter 11 in January 2017 and the bondholders exchanged their debt for common stock.
The Newco – no name has yet been announced – will have proforma revenues of $831 million, of which $210 million will come from Forbes. It will have adjusted EBITDA of $77 million. However Newco expects to achieve $23 million in synergies, of which $15 million will come from Corporate expenses.
Superior will own 52% of Newco and will also transfer $250 million of debt to it. The CEO of Superior, David Dunlap will become the CEO of Newco. A CFO will be named later.
The remaining businesses of Superior will have revenues of $806 million. CFO Westy Ballard will become CEO while Chief Accounting Officer James Spexarth will become CFO.
The transaction is expected to close in the first quarter of 2020.
In further good news for Superior, its shares will begin trading again on the New York Stock Exchange on December 26. Back in September, I wrote about the shares being delisted for low stock price. The company has now completed a one-for-fifteen reverse stock split.