Kodiak to acquire CSI Compressco for $854 million

Kodiak Gas Services, based in Montgomery, TX, has agreed to buy CSI Compressco LP, based in The Woodlands. The deal is an all-stock transaction that values CSI at $854 million (including the assumption of $619 million of net debt).

That represents $1.65 per CSI stock unit. For most of 2023 the units have been priced around $1.20 to $1.40. At the beginning of December, the price spiked to $2 per unit.

The transaction creates the largest contract compression fleet in the US with 4.3 million revenue-generating horsepower. Compression is used in various parts of the Energy industry such as compressing natural gas to the required pressures used in processing facilities or pressurizing gas lift systems for field-wide reinjection to lift oil.

CSI was formed in 2000 and went public in 2008. Until January 2021, CSI was effectively controlled by Tetra Technologies, another Houston-area public company. Tetra sold its interest to Spartan Energy Partners, a PE-backed private company, for $30.7 million (plus the elimination of $622 million of net debt).

Kodiak went public in June 2023 in a $256 million IPO. The company currently has a market cap of $1.5 billion.

Kodiak is projecting $20 million of annualized cost savings from the acquisition, though no details were given about the savings

The transaction is expected to close in Q2 2024.



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