Superior Well Services, Inc. Closes Acquisition of Oilfield Service Assets from Diamondback Holdings, LLC

Superior Well Services, Inc. Closes Acquisition of Oilfield Service Assets from Diamondback Holdings, LLC

Superior Well Services, Inc. announced that it has closed its previously announced acquisition of certain oilfield service assets from Diamondback Holdings, LLC, a privately-owned company.

Superior acquired Diamondback’s pressure pumping, fluid logistics and completion, production and rental tools business lines for $225 million in total consideration, subject to certain post-closing adjustments. The acquisition consideration consisted of $70 million in cash, $75 million of Series A 4% Convertible Preferred Stock (Preferred Stock) with a perpetual term and $80 million in Second Lien Notes. Each share of Preferred Stock is entitled to a liquidation preference of $1,000 per share and is convertible into 40 shares of common stock subject to adjustment (representing a conversion price of $25 per share based on the liquidation preference). The Second Lien Notes are due in November 2013 and are pre-payable without penalty at the Company’s option. The interest rate on the Second Lien Notes is initially set at 7% and escalates 1% annually. The purchased business lines produced revenue of $259 million for the trailing twelve month period ended September 30, 2008.

As part of the acquisition, Superior will acquire 128,000 horsepower, 105 transports and trucks, 400 frac tanks and six water disposal wells. After the transaction, Superior will operate a total of 423,000 horsepower, an increase of 43% percent from the quarter ended September 30, 2008.

David Wallace, Chief Executive Officer, said: “This is an exciting transaction for Superior and we’re thrilled to add such a high-quality group of professionals and assets. Once the Diamondback assets are fully incorporated into Superior’s operations, we anticipate that this acquisition will be accretive to net income and cash flow on a per share basis. Our acquisition of assets from Diamondback will enable Superior to strategically increase market share in core markets without bringing additional capacity to the pressure pumping industry and will allow us to offer a broader array of wellbore services to both new and existing customers. The majority of the pressure pumping equipment being acquired from Diamondback is less than three years old and was built by many of the same suppliers we use, which we believe will ease integration. In addition to the reduction of shared overhead costs, we believe profit upside exists from combining Diamondback’s high-quality assets with our geographically diversified operations footprint. Further, Diamondback’s existing service centers have limited territorial overlap with Superior’s existing service centers, allowing us to rapidly increase our operational footprint while retaining hard to find key personnel and the customer relationships they have worked hard to establish.”

The assets that Superior is purchasing from Diamondback are operating in the Anadarko, Arkoma, and Permian Basins, as well as the Barnett Shale, Woodford Shale, West Texas, Southern Louisiana and Texas Gulf Coast.

Jefferies & Company, Inc. served as exclusive financial advisor to Superior, and Vinson & Elkins LLP served as its legal counsel.

Share this post