TETRA Technologies has sold most of its interests in CSI Compresso for $30.7 million. As a result, Compresso will no longer be consolidated in the results of Tetra. Both companies are publicly-traded and based in The Woodlands.
TETRA is mainly involved in completion fluids. It’s also the largest producer of Calcium Chloride which has many non-oilfield uses such as de-icing products. CSI Compresso provides compression services and equipment for natural gas and oil production.
The buyer of TETRA’s stake is Spartan Energy Partners, a PE-backed company, also based in The Woodlands. Spartan provides gas treatment, compression and processing solutions. Tetra will retain an 11% stake in CSI Compresso.
New management at CSI Compresso
TETRA’s CEO and CFO also held the same roles at CSI Compresso. They have resigned from the latter to be replaced by John Jackson, CEO of Spartan and Jonathan Byers, Head of Corporate Development at Spartan. Mr. Byers joined Spartan in 2010. Prior to that. he worked at Price Gregory and SCF Partners.
In connection with the sale, TETRA will continue to supply accounting, IT and other back office services to CSI Compresso for up to one year.
Compresso debt weighing down TETRA
TETRA and CSI Compresso always seemed an odd mix as the asset and capital structure required for the businesses are very different. Prior to the sale, TETRA had $843 million of debt, of which $637 million related to CSI Compresso. Even though there were no cross default provisions or cross guarantees on the debt, management felt the high debt levels weighed down TETRA’s stock price.
The deal brings to a close one of the more poorly-timed transactions in oilfield history. TETRA had a relatively small compression division until it agreed to buy Compressor Systems for $825 million in cash in July 2014. At the time, West Texas crude oil prices were over $100 a barrel. Oops.
As an aside, Bloomberg published an article in October 2020 that stated that Calcium Chloride produced in TETRA’s Finland factory was being shipped to Peru, smuggled into Ecuador and used in cocaine production by Columbian drug lords. Not the non-oilfield diversification that TETRA was looking for! Bloomberg didn’t allege that TETRA had done anything wrong.