[Update Nov 1 2022 – The deal has now closed]
US Well Services has agreed to be taken over by ProFrac in an all-stock deal that values the equity at around $93 million.
USWS, based in the Galleria, was founded in 2012 and was taken public for $274 million by a SPAC in November 2018. It currently operates five electric frac fleets and one diesel unit.
USWS also has about $265 million in debt. This includes $110 million of convertible loan notes. As part of the deal, ProFrac will issue stock worth $177 million to eliminate these notes. ProFrac also intends to refinance the remaining long-term debt.
Just last month, USWS announced leadership changes that resulted in Kyle O’Neil being promoted from CFO to CEO.
ProFrac just went public in May 2022 via a $288 million IPO. It has its head office in Willow Park, west of Fort Worth. With the acquisition, ProFrac will leapfrog Liberty Oilfield and Nextier become the second largest pressure pumper by horsepower, behind only Halliburton.
ProFrac was founded by the Dan and Farris Wilks in 2016. Prior to that, they created Frac Tech in 2002 which the brothers sold in 2011 for $3.5 billion. Dan and Farris are not on the Board of ProFrac. However, Matt, son of Dan, is Executive Chairman, while Ladd, son of Farris, is CEO.
ProFrac, through an affiliate, already owned 13% of USWS. It acquired its stake in 2021. At the same time, ProFrac also paid $22.5 million to USWS for licenses to build three electric frac fleets. Under that agreement ProFrac also expected to pay USWS $22.5 million a year, over the next four years, for additional licenses. With the acquisition of USWS, ProFrac will no longer have to pay those additional fees.
ProFrac also expects to generate $35 million in synergies in 2023. $13 million of this will come from the elimination of duplicate corporate and field overheads, while $12 million will result from reduced repair and maintenance costs (primarily by using in-house manufacturing facilities). $5 million each will arise from supply chain synergies and reduced maintenance capex.
ProFrac also owns 23% of Flotek Industries, another struggling Houston oilfield services company. In addition, companies affiliated with the Wilks brothers also own 7% of Nextier and 9% of ProPetro Holdings, another pressure pumper. They also took Carbo Ceramics private in March 2020.
The deal for USWS is expected to close in the fourth quarter.