Category Archives: Oilfield Services

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 [Update 4-1-22 – Actually he got $3.6 million according to the proxy] but his restricted stock awards will vest fully ($8.6 million). Ms. Cougle will be eligible for a cash severance of $1.6 million (2 time base plus target bonus) [Update – she got $2 million]. 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

Senior management changes at seismic company

MIND Technology, a provider of seismic equipment, based in The Woodlands, has announced changes to its senior management. Guy Malden, Co-CEO and Executive VP of Marine Operations will retire at the end of the year. Rob Capps, Co-CEO and CFO, will become sole CEO. Mark Cox, currently the Chief Accounting Officer, steps up to CFO.



The company was formed in 1987 by Billy Mitcham and was originally called Mitcham Industries. It went public in 1995 and had its head office in Huntsville. Mr. Mitcham was CEO until he died in September 2015. Four days prior, Messrs. Malden and Capps had been appointed co-COOs. After the death of Mr. Mitcham, they were appointed co-CEOs.

The name change and head office move to The Woodlands occurred in 2019. The company has revenues of $21 million and a market capitalization of $27 million. MIND started out as a lessor of seismic equipment but, in recent years, has moved into manufacturing. Last year, it decide to exit the leasing business completely, with the resulting closure of offices in Calgary, Bogota and Budapest.

Mr. Capps, 67, has been CFO since 2006. Mr. Cox, 61, joined the company in February 2017. Prior to that, he spent 7 years at Key Energy Services, where he was (at different times) the Controller and VP of Tax. He also worked at BJ Services for 18 years.

The Board has not yet determined whether to make any changes to the compensation of Mr. Capps or Mr. Cox.

MIND stands for Motivate, Innovate, Navigate, Discover

 

SEC filing – Mind Technology management changes

Diamond Offshore puts itself up for sale

Diamond Offshore Drilling has put itself up-for-sale. The company has retained Goldman Sachs as its financial advisor.



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 Wolford as its CEO. He was formerly the CEO at Pacific Drilling and Senior VP – Operations at Noble Corporation.

In the words of the press release, the company has appointed an independent committee ‘to explore strategic alternatives to maximize shareholder value. These alternatives may include, among other things, continuing as a standalone public company, pursuing asset acquisitions or entering into a business combination with a strategic partner.’

There has been a fair amount of restructuring and consolidation among the offshore drillers in recent months;

  • Noble acquired Pacific Drilling for $357 million in April 2021. As it acquired net assets of $422 million, Noble recognized a gain on bargain purchase of $64 million.
  • Noble and Transocean are competing to buy assets of Seadrill which has its operational headquarters in Norway and is currently in bankruptcy (filed in Houston).
  • Valaris (formed from the mergers over the years of Ensco, Pride and Rowan) emerged from bankruptcy in May 2021
  • Transocean eliminated $800 million of debt, in September 2020, in a complicated out-of-court bond restructuring.

Everybody except Transocean has recently exited bankruptcy. In all cases, bondholders wrote off a lot of debt in return for equity. Many of them are pushing for consolidations so they can realize their investments and maybe, over time, claw back some of the losses.

SEC filing – Diamond Offshore strategic alternatives

 

 

 

 

Patterson-UTI to acquire smaller rival for $295 million

Allan D. Hasty

Patterson-UTI Energy, a drilling rig contractor based in NW Houston, has agreed to acquire smaller rival, Pioneer Energy Services, based in San Antonio for $295 million. This includes the retirement of all the $200 million debt of Pioneer. $30 million will be paid in cash, the rest in stock.



Pioneer exited bankruptcy in May 2020, having converted $267 million of debt into equity.  Loomis, Sayles & Co, an investment management firm, ended up owning 44% of Pioneer. BlackRock owns 20% of Pioneer (and 15% of Patterson-UTI).

Patterson-UTI is buying 17 rigs in the USA and 8 that operate in Columbia. 16 of those rigs are super-spec rigs, adding to the 150 that Patterson-UTI already has. This will give Patterson a market share of around 30% for super-spec rigs, behind market leader, Helmerich & Payne (around 37%).

Pioneer’s drilling rigs account for about 60% of its revenue ($34 million out of $59 million for the 1st quarter of 2021). The rest of Pioneer’s revenue in the quarter came from Well Servicing ($14 million) and Wireline Services ($10 million).  Patterson has said it will divest of the Well Servicing business after the deal closes, expected in the 4th quarter of 2021.

https://patenergy.com/investors/news/press-release-details/2021/Patterson-UTI-Energy-Announces-Agreement-to-Acquire-Pioneer-Energy-Services/default.aspx