Category Archives: Oilfield Services

Noble to merge with Maersk Drilling in a $3.4 billion stock deal

Noble Corporation, based in Sugar Land, has agreed to merge with Maersk Drilling in an all-stock transaction worth $3.4 billion. Maersk has its head office in Denmark and is listed on the Copenhagen stock exchange.



The combined company will have 20 floater rigs and 19 jackup rigs that can operate in harsh environments such as the North Sea. The fleet will be the second largest behind Valaris, though Transocean is the largest offshore operator by revenue.

Noble is taking an active role in the consolidation of companies in the offshore drilling market. Having exited bankruptcy in February 2021, it acquired Pacific Drilling for $357 million in an all-stock transaction in March 2021.

The shareholders of Noble and Maersk will each own 50% of the combined business. The company will keep the Noble name and will continue to be based in Houston.

Noble Chairman, Chuck Sledge, will become Chair of the combined company, while Noble CEO, Robert Eifler, takes the combined CEO role. Claus Hemmingsen, Chairman of Maersk, will be one of the three directors designated by Maersk. Noble will appoint three directors in addition to Mr. Sledge.

Other positions on the executive leadership team are to determined. Richard Barker is the CFO of Noble. He joined in March 2020  and has an investment banking background. The current CFO of Maersk is Houston-based Christine Morris. She joined in January of this year. Ms. Morris was previously CFO at BJ Services and Head of Financial Planning and Analysis at Halliburton.

The company expects to achieve $125 million in annual cost synergies within two years. The Maersk office in Copenhagen will be scaled down significantly. However, the Maersk Stavanger office in Norway will become the hub for North Sea operations.

The deal is expected to close in mid-2022.

SEC filing – Noble Maersk merger

 

 

Energy transition SPAC completes $175 million IPO

Pyrophyte Acquisition Corp has completed its $175 million initial public offering (IPO). The blank check company has its head office in the River Oaks area of Houston.

The company is seeking targets involved in energy transitions. That could mean renewable power generation, energy storage, zero-emission transportation, carbon capture or zero/low-carbon industrial applications.



The chairman of the company is Dr. Bernard Duroc-Danner. In 1987 he was hired to start up the oilfield services business of EVI. 47 acquisitions later, he retired as Chairman and CEO of Weatherford in 2016. In 2018, he co-founded a start-up of an artificial intelligence software company with applications in wind renewable energy.

Sten Gustafson is the CEO. From 2012 to 2014 he was the CEO of ERA Group, the Houston-based helicopter company that was spun out of Seacor in 2013. Since 2018, he was served as the Chairman of Golden Energy Offshore, a Norwegian operator of offshore service vessels.

The CFO is Thomas Major who spent ten years at NOV, including five as Director of Corporate Development.

The company is the fourth Houston-based SPAC or blank check company to go public since the beginning of last week. You can read about the others here and here.

https://www.globenewswire.com/news-release/2021/10/26/2321254/0/en/Pyrophyte-Acquisition-Corp-Announces-Pricing-of-175-Million-Initial-Public-Offering.html

 

Oilfield water company completes IPO

Aris Water Solutions has completed its initial public offering (IPO). It raised $214 million at $13 per share. That price was below the IPO range of $16-$18 per share. The company has its head office in the Memorial City area.



The company is involved in gathering, transporting and handling produced water generated from oil and natural gas production. In addition, it develops and operates recycling facilities to treat and recycle produced water. The company has 640 miles of produced water pipeline, 48 water handling facilities and 10 recycling facilities. These facilities are located in the Permian Basin.

The business (technically, the predecessor company, Solaris Midstream) was formed in 2016 by Bill Zartler, founder and Executive Chairman. Trilantic Capital and Yorktown Energy Partners backed the company. Mr. Zartler is also the founder and CEO of Solaris Oilfield Infrastructure, which went public in 2017.

For the six months to June 2021, the company had revenues of $103 million.

The CEO is Amanda Brock. She is the former CEO of Water Standard and served as the President of the Americas for Azurix, a business spun out of Enron in 1999.

Brenda Shroer is the CFO. She joined the company as an employee in June 2021 but has been on the board since July 2019. At that time she was the CFO of Concho Resources. Concho took a 20% stake in Aris in July 2019 when it sold produced water assets to the company for $330 million. Concho was acquired by ConocoPhillips earlier this year.

Aris SEC registration statement

 

Expro completes merger with Frank’s International

Frank’s International and Expro have completed their all-stock merger. The deal was originally announced in March. The business has a combined enterprise value of $3 billion.



Expro is a leading provider of well flow optimization solutions, while Frank’s is a leader in tubular running and other services related to well construction. The combined business had revenues of about $1.1 billion in 2020.

Although, it was billed as a merger, effectively it is Expro who have taken over. The publicly-traded entity is now called ‘Expro Group Holdings’. Frank’s is being kept as a brand name.

Expro shareholders ended up owning 65% of the combined business. Expro CEO Mike Jardon and CFO Quinn Fanning (ex CFO of Tidewater) took over the same roles in the combined business.

In October 2019, the Board of Directors at Frank’s decided that they needed to merge with a large scale partner in order to diversify and achieve scale. In May 2020, they first approached Expro, another unnamed privately-held oilfield services company, and two publicly-traded oilfield services companies.

Frank’s Executive Management

Frank’s CEO Michael Kearney has been appointed Chairman of the Board. Melissa Cougle has stepped down as CFO, though she remains with the company as an employee.

CEO Kearney won’t receive any severance but his restricted stock awards will vest fully ($8.6 million). Ms Cougle will be eligible for a cash severance of $1.6million (2 time base plus target bonus). Her restricted stock will also vest ($1.6 million).

Deal negotiations

The deal with Expro took a long time to reach agreement because of the complicated nature in which Frank’s went public in 2013. As part of that IPO, Mosing Holdings, on behalf of the family that controlled Frank’s at the time, entered into a Tax Receivable Agreement (TRA) whereby most of the future benefits from changes in taxable basis would go to Mosing Holdings and not the company.

Initially, as calculated in the TRA, Mosing Holdings would have received a cash payment of $68 million as a result of the deal. That was a major sticking point with Expro. They ended up settling the TRA for $15 million.

SEC filing – Expro Franks merger completion

 

CFO resigns from drilling equipment manufacturer

Luca Pacioli – the father of accounting

Raj Kumar, CFO of Dril-Quip, has resigned, effective November 1, 2021, to take another opportunity. [UPDATE 10-4-21 He’s joining Houston-based Kirby Corp as CFO]. The company has engaged an executive search firm to conduct a search for his replacement.



Dril-Quip is based in NW Houston and manufactures offshore drilling and production equipment. It has revenues of $340 million and a market capitalization of $892 million (partly driven by a net cash balance of $370 million).

Mr. Kumar joined Dril-Quip in June 2017 as its Treasurer and was promoted to CFO in May 2020, succeeding Jeff Bird who became COO (and is now the CEO). Prior to that he spent two years at Frank’s International, another Houston drilling company, where he worked for Mr. Bird, who was the CFO at Frank’s at the time.

Mr. Kumar started his career in investment banking in Malaysia before joining Dell and later transferring to Austin. He has also worked for LyondellBasel and FMC Technologies.

SEC filing – Dril-Quip Kumar resignation

Diamond Offshore COO and CFO walk away with severance

Diamond Offshore COO Ron Woll and CFO Scott Kornblau have resigned, taking advantage of ‘walkaway severance rights’ put in place following the company’s exit from bankruptcy in April 2021.



The offshore driller has its head office in west Houston and owns four drillships and eight semisubmersibles. It exited Chapter 11 bankruptcy in April 2021, having converted $2 billion debt into equity. For 2020, it had revenues of $733 million and its shares currently trade over-the-counter.

In May, the company appointed Bernie Woolford as its new CEO and in August, the company put itself up-for-sale.

Dominic Savarino has been promoted to be CFO. He is currently Chief Accounting Officer and Tax Officer. Mr. Savarino joined the company in 2017, the same year that Mr. Kornblau became CFO (initially in an interim capacity). He will receive an increase in base salary from $400,000 to $440,000. Mr. Woll won’t be replaced and his duties will be assumed by other senior executives.

Severance

The severance plan that was put in place in April allowed senior executives to resign voluntarily by September 20, 2021 and claim severance benefits because the bankruptcy was deemed a change-in-control.

Mr. Woll will receive severance of one year’s salary ($515,630) and 2021 target bonus (70% of salary or $360,941). Mr. Kornblau will also get one year’s salary ($435,000) and 2021 target bonus (50% of salary or $217,500).

For each of 2018, 2019 and 2020 Mr. Woll received a $750,000 cash retention bonus. In addition he also received cash bonuses in 2020 of $1.4 million as the company was unable to grant long-term equity awards because of the bankruptcy.

Likewise, Mr. Kornblau received cash bonuses in 2020 of $0.6 million.

CEO departure

As part of the emergence from bankruptcy, Marc Edwards, the previous CEO, left with a lump-sum cash severance of $6 million. He had also received $1.5 million retention bonus in each of 2018 and 2019.  In 2020, he also received cash bonuses of $5.8 million.

For the two plus months ended 30 June, post-bankruptcy, the company had a net cash outflow from operations of $66 million. For a company not generating cash, it has spent a lot of money on cash bonuses and severances for senior executives.

SEC filing – Diamond Offshore CFO

ION Geophysical puts itself up-for-sale

Poseidon

ION Geophysical, based in west Houston, has put itself up-for-sale. The company has hired Tudor Pickering Holt to assist in the evaluation of a range of strategic alternatives including outright sale, sale of assets and debt financing.



The stock price jumped from $1.50 to $1.94 in after-hours trading. That gives it a market capitalization of $62 million.

Traditionally, the company has provided seismic services to the offshore oil and gas market. More recently, it has been trying to diversify into providing mission-critical subscription offerings and engineering services offshore (like a maritime equivalent of an air traffic control system).

The company has revenues of about $77 million, but it is still losing money even at the EBITDA level. It hasn’t made an annual operating profit since 2014.

Debt restructuring

In April, it completed a debt restructuring (code name Project Poseidon). It exchanged $121 million of debt due in December 2021 with $116 million of new notes due December 2025. $7 million of the old notes remain outstanding. The new notes also have a right to convert to equity at a $3 conversion price.

The company also completed a $42 million equity raise. $8 million of the cash was used to pay the costs associated with the debt issuance. $17 million was paid to the debt holders as part of the exchange.

Chinese influence wanes

The largest shareholder is Gates Capital Management, who own 16.4%. They also own $70 million of the new loan notes.

The third largest shareholder at 5.5% is BGP, a seismic contractor that is a subsidiary of China National Petroleum Corporation. However, that ownership percentage is about half of what it used to be.

For many years, the company operated a joint venture with BGP. However, in March 2020, the company announced it had agreed to sell its 49% stake in the joint venture for $12 million. It didn’t say to whom and the deal still hasn’t closed 18 months later.

https://ir.iongeo.com/news-releases/news-release-details/ion-initiates-review-strategic-alternatives

Water logistics company relocates to Houston

[UPDATE 09-03-21 After just over 4 months, CEO Pat Bond has left with an 8-month severance. Current chairman and former CEO Charles Thompson takes over as CEO again.]

Nuverra Environmental Solutions has relocated its corporate office from Scottsdale, Arizona to west Houston. The company provides water logistics and oilfield services, mainly in the Rocky Mountains and the Marcellus Basin in NE USA. It has a market capitalization of $34 million.



The company was founded in 2007 by Dick Heckmann, a serial entrepreneur who also co-owned the Phoenix Suns NBA team. Mr. Heckman died in October 2020, though he retired from Nuverra in 2014.

In April, Pat Bond was appointed the new CEO. He has held numerous roles at Halliburton, Weatherford and Schlumberger. Most recently he was co-CEO of Gravity Oilfield Services, another water logistics company.

Eric Bauer has been the interim CFO since April 2020. That followed the resignation of previous CFO, Stacy Hilgendorf, in November 2019, to take a position at Sprouts Farmers Market (based in Phoenix). According to his LinkedIn profile, Mr. Bauer, who has an investment banking background, is also based in Houston. Unusually, he was hired as an interim CFO on a three-year contract.

In November, the company completed a debt refinancing that lowered the interest rates and extended the maturity of debts. It also eliminated the debt owed to Gates Capital and Ascribe. Those two investment firms own 85% of the equity, following Nuverra’s bankruptcy reorganization in 2017.

Nuverra Q2 results

 

 

Stabilis Solutions appoints new CEO

Stabilis Solutions has appointed Westy Ballard as its new CEO, replacing Jim Reddinger. In addition, the company founder and executive chairman, Casey Crenshaw, will become non-executive chairman of the Board.



Stabilis is based in West Houston and is a small-scale producer and distributor of Liquified Natural Gas. It went public in July 2019 when it completed a reverse takeover of another Houston company, AETI, but was delisted four months later for not having enough publicly-held shares. It was finally relisted in April 2021.

Westy Ballard was previously the CFO at Superior Energy Services, a Houston-based oilfield services company. Superior was publicly-traded until it filed for bankruptcy in December 2020. It exited in February 2021 and Mr. Ballard left six weeks later. As an aside, Superior today announced that it has removed the interim tag off CFO James Spexarth.

Mr. Ballard will receive a base salary of $500,000.

Mr. Reddinger, joined the company in 2013 as CFO and was appointed CEO in November 2018. He will continue to receive his salary of $500,000 until the end of the year. His restricted stock units will also vest (market value $3.3 million).

SEC filing – Stabilis CEO

Drilling contractor replaces CEO and CFO

Credit: Marine Traffic

Valaris, the offshore drilling contractor that exited bankruptcy proceedings in April 2021, has changed out its CEO and CFO. Thomas Burke, CEO since April 2019, has stepped down, to be replaced by interim CEO Anton Dibowitz. Jon Baksht, CFO since June 2019, is replaced by interim CFO Darin Gibbins.



Valaris has its corporate offices in London, though most of its management are (or were) based in Houston. The company was formerly known as Ensco. It acquired Pride International in 2011 and Rowan in 2019, at which point it changed its name to Valaris.

Valaris entered Chapter 11 bankruptcy in August 2020 and exited with $7.1 billion of debt converted to equity. It currently has a market capitalization of $1.9 billion.

CEO severance

Mr. Burke had a base salary of $855,000. He will receive a severance of 2 times base salary ($1.7 million), plus 2 times average bonus or target bonus (110% of base or $1.88 million), plus a pro-rated target bonus for 2021 ($0.6 million). That’s $4.2 million in total.

Mr. Burke was the CEO of Rowan, prior to its merger with Ensco. After he was appointed CEO in April 2019, he received a cash bonus in 2019 of $3.9 million, including $3.0 million as a result of meeting cost reduction targets following the merger. From April 2020 until June 2021, quarterly cash bonuses were paid out in lieu of stock options. As a result Mr. Burke earned another $4.7 million for 2020. The 2021 bonuses paid out have not yet been disclosed.

The company also incurred $0.4 million in overseas allowances in 2019 for Mr. Burke in respect of his move from Houston to London. That includes housing, child tuition and tax equalization.

Mr. Burke will continue to serve on the Board of Managers of Saudi Aramco Rowan Offshore Drilling, the company’s 50/50 joint venture with Saudi Aramco. He will receive an annual retainer of $150,00 for this role.

CFO Severance

Interim CEO Anton Dibowitz currently serves on the newly-constituted Board of Directors and was formerly the CEO of Seadrill.

Mr. Baksht had a base salary of $550,000. He will receive a severance of 2 times base salary ($1.1 million), plus 2 times target annual bonus (85% of base or $935,000), plus a pro-rated target bonus for 2021 ($312,000). That’s $2.35 million.

Mr. Baksht received cash bonuses of $3 million in 2020. The company also incurred $0.4 million in overseas allowances for Mr. Baksht in 2019 as well.

Interim CFO Darin Gibbins joined Rowan in 2006 and is currently the VP of Investor Relations and Treasurer. He will receive a annual salary of $375,000.

SEC filing – Valaris CEO and CFO change