Home / News / Baker Hughes, CSL Capital Management, WSEP to form North American land pressure-pumping company

Baker Hughes, CSL Capital Management, WSEP to form North American land pressure-pumping company

Baker Hughes, CSL Capital Management and West Street Energy Partners (WSEP), a fund managed by the Merchant Banking Division of Goldman Sachs, have announced an agreement to create a pure-play North American land pressure-pumping company. The new company will leverage operational experience and industry expertise to provide customers with leading hydraulic fracturing and cementing services supported by the current Baker Hughes technology portfolio.

Under the terms of the agreement, Baker Hughes will contribute its North American land cementing and hydraulic fracturing businesses, which comprises assets in the US and Canada. This includes personnel, expertise, technology and infrastructure. Upon closing, CSL Capital Management will contribute its Allied Energy Services platform, which provides hydraulic fracturing and cementing services on land in North America. Further, CSL Capital Management and WSEP will together contribute $325 million in cash to the new company, of which $175 million will be used to strengthen its balance sheet and position it for growth, while the remaining $150 million will go to Baker Hughes. CSL Capital Management and WSEP together will own 53.3% of the new company, and Baker Hughes will retain a 46.7% ownership stake. The new company will operate under the BJ Services brand and will be headquartered in Tomball, Texas.

“The proposed transaction will create a pure-play pressure pumping competitor for the benefit of shareholders, customers and employees,” Martin Craighead, Chairman and CEO of Baker Hughes, said. “With a strong balance sheet and deep operational expertise, the new company will benefit from a sharp focus on pressure pumping to respond quickly to market dynamics and better serve customers. In line with our asset-light strategy, this ownership model enables Baker Hughes to participate in the North American land pressure-pumping market, while reducing capital intensity and maximizing shareholder value.”

“With the combination of the Baker Hughes North American land cementing and hydraulic fracturing assets and our Allied Energy Services’ fracturing and cementing businesses, we are excited to create a leader in the pressure-pumping sector and to operate under the well-regarded BJ Services name, which for almost 150 years has stood for superior and timely service to its customers and to the market,” stated Charlie Leykum, Founding Partner of CSL Capital Management.

Warren Zemlak, current President & CEO of Allied Energy Services and former long-time Senior Executive with both Schlumberger and Sanjel, will serve as CEO of BJ Services, with the balance of the executive team to include oilfield services veterans. The company will be governed by an experienced board comprised of industry leaders.

“The combined company will have 1.9 million hydraulic horsepower and more than 240 cementers, among other assets, and an owned-facility footprint throughout North America to serve our customers in all basins,” Mr Zemlak said. “We look forward to renewing the BJ Services legacy and utilizing our experience building highly reliable teams and efficient operations to create a North American pressure-pumping leader.”

Baker Hughes will provide customary support services to ensure a seamless transition. Access to current Baker Hughes’ pressure-pumping technology will be provided to the new company through a licensing agreement. Through a strategic collaboration, Baker Hughes will have access to BJ Services’ product and service portfolio to continue to provide solutions to customers in the North American land market.

The financial results of the Baker Hughes North American land pressure-pumping business will continue to be reported as part of Baker Hughes’ consolidated financial results through Q4 2016. This agreement does not include Baker Hughes’ international pressure-pumping businesses or its Gulf of Mexico offshore pressure-pumping operations, which Baker Hughes will continue to operate.

The agreement is subject to customary regulatory approvals. The companies are committed to working constructively with regulatory authorities to obtain required approvals.

Leave a Reply

Your email address will not be published. Required fields are marked *

*