Category Archives: Oilfield Services

Leadership changes at US Well Services

US Well Services Nyx Clean Fleet® Frac Unit

Kyle O’Neil, CFO of US Well Services, has been promoted to CEO, replacing co-founder, Joel Broussard, who becomes non-executive Chairman. Josh Shapiro, currently VP of Finance, is promoted to CFO.



Poor financial performance

US Well Services is a struggling pressure pumping company that has its head office in the Galleria area of Houston.  The company was founded in 2012 and it struggled even before it was taken public for $274 million by a SPAC in November 2018. In early 2017, the company had completed an out-of-court restructuring that resulted in $118 million of debt being converted to equity.

Mr. O’Neil was appointed CFO when the business went public and joined from TCW Direct Lending, the main equity shareholder.

The company’s unique selling point was that it had patented all-electric hydraulic fracturing which uses less fuel and generates less emissions than conventional diesel fleets. At the time of going public, it had 11 fracking fleets, including two that were electric-powered. It had plans to add five more electric units.

As of May 2021, the company still had 11 fleets, though five were electric. The company has since sold off its diesel units to become a pure-play electric fracking company. It is currently building four of its next generation units and will put them into service later this year.

As of December 2021, the company had negative shareholders’ equity of $129 million and debt of $172 million. The current stock price of USWS is 91 cents. The market cap is $64 million.

In with the new…

Mr. O’Neil will receive a base salary of $540,000 and was granted 600,000 deferred stock units that will vest over three years. He also received a performance stock award worth $650,000, that vests under certain conditions.

Josh Shapiro, the new CFO, joined the company in March 2019. Prior to that, he worked at Piper Sandler as an investment banker. His new base salary will be $400,000.

…Out with the old

Mr Broussard will receive a severance of $950,000, to be paid in three instalments over the next 18 months. He also received 1.1 million restricted stock units. Half vests in 6 months, the rest in 18 months.

The company also announced that Matt Bernard had resigned as Chief Administrative Officer. Mr. Bernard was also the CFO between 2015-2018.  Mr. Bernard isn’t receiving any severance. However, he has signed a consulting agreement that will pay him $13,417 monthly. The agreement can be terminated by either party with 30 days notice.

SEC filing – management changes

 

Halliburton appoints new CFO

Halliburton has appointed Eric Carre as its new CFO. He replaces Lance Loeffler, who has been promoted to Senior VP of Middle East and North Africa.

Halliburton has revenue of $16 billion, over 40,000 employees and a market capitalization of $32 billion.



Mr. Carre is currently the Executive VP, Global Business Lines and Chief Health, Safety and Environmental Officer. He started with Halliburton in 1991 as a Project Engineer and holds a master’s degree in mechanical engineering from Université Libre de Bruxelles in Belgium.

Mr Carre’s former role, Global Business Lines, covered the Drilling & Evaluation and Completion & Production divisions as well as Landmark & Consulting, Project Management and Global Technology. Halliburton already had Executive VPs for Drilling & Evaluation (Rami Yassine) and Completion & Production (Michael Sugura) and they remain in place. It’s not clear who now has responsibility for Landmark & Consulting, Project Management and Global Technology.

Mr. Loeffler has been CFO since November 2018. He joined Halliburton in 2014 and was VP of Corporate Development and then Investor Relations before becoming the CFO. Previously he held director positions at Deutsche Bank and UBS Investment Bank.

Presumably both Mr. Carre and Mr. Loeffler are being groomed for the CEO position at some point. Current CEO Jeff Miller has been in that position since June 2017.

No compensation arrangements have been disclosed for either Mr. Carre or Mr. Loeffler.

https://www.businesswire.com/news/home/20220502005110/en/

 

Diamond Offshore to relist on NYSE

Diamond Offshore is returning as a public company. Its stock will be listed on the New York Stock Exchange from March 30 under the ticker symbol of ‘DO’.



The offshore driller, which has its head office in West Houston, owns four drillships and eight semisubmersibles. The company also manages three rigs for Aquadrill, which are currently warm stacked.

Diamond exited bankruptcy in April 2021, having converted $2 billion of debt into equity. The company put itself up for sale in August 2021, but in January it announced it would remain independent after failing to attract any satisfactory takeover offers.

Diamond expects revenues in 2022 of around $700 million, with adjusted EBITDA of approximately $60 million and capital expenditures around $57 million. The company still has net debt of $212 million, so it is projecting a negative free cash flow of $75 million. Obviously, the company believes the rising oil prices will lead to increasing rig day rates.

After exiting bankruptcy, most of the previous senior management left with large severances. CEO Marc Edwards left in April 2021 with a $6 million lump-sum cash severance. CFO Scott Kornblau and COO Ron Woll followed in September 2021 with severances of $653,000 and $876,000 respectively. That was on top of the cash bonuses they received while the company was in bankruptcy.

In October 2021, Mr. Kornblau joined Great Lakes Dredge and Dock Corporation as its new CFO.

Bernie Wolford has served as the CEO since May 2021. He is the former CEO of Pacific Drilling. Dominic Savarino was promoted to CFO from Chief Accounting Officer, having been at the company since 2017.

https://www.prnewswire.com/news-releases/diamond-offshore-announces-relisting-on-nyse-301509630.html

Exterran Corporation to be acquired for $735 million

Houston-based Exterran Corporation has agreed to be bought by Enerflex in an all-stock transaction that values the company at $735 million.



The contract combines two businesses that are primarily involved in natural gas processing and compression services, including manufacturing, service and contract operations.

Enerflex shareholders will own approximately 73% of the combined business which will continue to be run from Calgary by the Enerflex management team.

The predecessor business to Exterran was formed in 1954 as South Coast Gas Company and later operated as Hanover Compressor Company and Universal Compression. In 2007, these two businesses merged to form Exterran Holdings. In 2015, the manufacturing and international compression businesses were spun off. The spin off was named Exterran Corporation, while the US compression business was renamed Archrock.

At the time of the spin-off, Exterran shares traded at $18. Before the takeover announcement, the stock was trading at $3. The company has struggled in recent years as E&P operators cut back on capital expenditures and the company was burdened with $525 million of debt at spin-off.

Enerflex expects to achieve $40 million of annualized savings. $35 million will come from restructuring the management and corporate support teams.

Assuming the Exterran management leave after the deal closes (expected in Q2 or Q3 this year) they will receive large payouts. CEO Andrew Way is in line for a cash severance of $6.1 million (3x base plus 3x  target bonus). Accelerated vesting of options will be worth another $3.3 million.

CFO David Barta will receive $1.9 million in cash severance (2x base plus 2x target bonus). His options will be worth $0.7 million.

https://www.enerflex.com/uploads/Presentations/Investor-Presentation-Enerflex-to-Acquire-Exterran.pdf

Diamond Offshore fails to attract satisfactory takeover offers

Diamond Offshore will remain independent after failing to attract any satisfactory takeover offers. The company had put itself up-for-sale back in August and hired Goldman Sachs as its financial advisor.



The offshore driller owns four drillships and nine semisubmersibles. It exited bankruptcy in April 2021, having converted $2 billion of debt into equity. Its stock is not currently publicly-traded.

As part of the sale process, the company approached four offshore drilling companies that had sufficient scale to acquire Diamond and were not in bankruptcy (isn’t that all of them?).

  • Company A submitted an indicative offer that was deemed inadequate. When asked to raise their bid, they walked away.
  • Companies B, C and D submitted indicative bids that were deemed worthy of further engagement. After commencing limited due diligence, companies B and C backed out.
  • In November, in light of various communications from Company D, the independent committee appointed by Diamond decided it would cease discussions with Company D.

Litigation with largest shareholder

Interestingly, back in July, Avenue Capital Management, a hedge fund that is the largest shareholder of Diamond with a 17% shareholding, sued the company. It was trying to force the company to hold an annual meeting, at which Avenue would put forward its own nominees for directors. The company and Avenue settled the lawsuit in August. As part of the settlement, the company disclosed details of the proposed takeover offers to Avenue.

In November 2021, Avenue delivered to the company a purported list of nominees for the next annual meeting. The company notified Avenue that the nominations were invalid because they were not in accordance with the bylaws. After a second settlement agreement with Avenue in December, the litigation and the nominees proposed by Avenue were withdrawn.

AGM in January

An annual meeting of stockholders will now take place on January 21,2022. There are three directors up for re-election, namely;

  • Adam Peakes – former CFO at Noble
  • Patrick Lowe – former COO at Ensco (now part of Valaris)
  • John Hollowell – former CEO of Shell Midstream.

All three were part of the four-person independent committee that was set up to explore strategic alternatives.

SEC filing – Diamond Offshore takeover discussions

 

 

Houston water logistics company to be acquired

[UPDATE 02-23-22 – The deal has now closed.]

Select Energy Services has agreed to acquire another Houston-based company, Nuverra Environmental Services for $45 million in an all-stock transaction. In addition, Select will also assume $20 million of debt that Nuverra has.



Both companies are involved in the water treatment, recycling and disposal of water and chemicals produced on onshore shale basins in the US. Nuverra primarily operates in Bakken, Haynesville and the Marcellus basins.

The signs have been there that Nuverra was preparing itself to be sold, namely;

  • The company moved its head office from Arizona to Houston in August 2021.
  • Eric Bauer was hired in April 2020 on a three-year contract as interim CFO. He has an investment banking background.
  • Two investment firms (Gates and Ascribe) own 85% of the equity following the company’s bankruptcy reorganization in 2017.

Pat Bond was appointed CEO in April 2021. He abruptly left in September. Current chairman and former CEO Charles Thompson took over as CEO again.

Nuverra has revenues of approximately $100 million and has only generated an operating profit once (in 2014) in the past 11 years. In its bankruptcy reorganization, the company converted more than $400 million of debt into equity. Since exiting bankruptcy, Nuverra has cumulative losses of $225 million.

The transaction is expected to close in the first quarter of 2022.

https://www.prnewswire.com/news-releases/select-energy-services-enters-into-definitive-agreement-to-acquire-nuverra-environmental-solutions-and-closes-on-the-acquisition-of-the-us-onshore-assets-of-hb-rentals-301443074.html

Dril-Quip appoints new CFO

Dril-Quip has appointed Kyle McClure as its new CFO. He replaces Raj Kumar, who resigned last month to become the CFO at Kirby Corp.



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Dril-Quip is a manufacturer of highly engineering drilling and production equipment. It has a market capitalization of $660 million (which includes $375 million of cash).

Mr. McClure joins from Airswift, a private global workforce solutions company, where he had been CFO since June 2019. Prior to that, he was CFO at Frank’s International (recently taken over by Expro) from March 2017 until June 2019.

At Frank’s, Mr. McClure replaced Jeff Bird who resigned in early 2017 to take the CFO position at Dril-Quip. Mr. Bird was recently appointed the CEO at Dril-Quip. Mr. Kumar also worked at Frank’s for Mr. Bird before joining Dril-Quip.

Mr. Bird and Mr. McClure also worked together for about a year at Houston-based Ascend Performance Materials where Mr. Bird was CFO and Mr. McClure was Treasurer.

Mr. McClure will receive a base salary of $400,000 and a cash sign-on bonus of $200,000. He also receives $1 million of equity awards that will vest over three years and $700,000 that will vest in 2024, subject to performance by the company.

SEC filing – Dril Quip McClure appointment

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