Baker Hughes, CSL Capital Management & Goldman Sachs’ Merchant Banking Division Agree to Form North American Land Pressure ...
November 29 2016 - 4:15PM
Business Wire
- Privately-held new company will provide
hydraulic fracturing and cementing services and technology for the
North American land market
- New company will have a strong balance
sheet as a result of a $175 million cash contribution from CSL
Capital Management and Goldman Sachs’ Merchant Banking Division and
a debt-free structure
- New company will be led by an
experienced management team and governed by a seasoned board of
industry leaders
- Baker Hughes will retain a 46.7 percent
ownership stake, and will receive $150 million in cash from the new
company
Baker Hughes Incorporated (NYSE:BHI), CSL Capital Management and
West Street Energy Partners (WSEP), a fund managed by the Merchant
Banking Division of Goldman Sachs, announced today 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
world-class 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 U.S. 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 percent of the new
company, and Baker Hughes will retain a 46.7 percent 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,” said Martin Craighead, Chairman and Chief Executive
Officer of Baker Hughes. “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 horse
power and more than 240 cementers, among other assets, and an
owned-facility footprint throughout North America to serve our
customers in all basins,” said Zemlak, CEO of the new BJ Services.
“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 the fourth
quarter of 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.
Wells Fargo Securities, LLC is acting as exclusive financial
advisor to Baker Hughes.
About Baker Hughes
Baker Hughes is a leading supplier of oilfield services,
products, technology and systems to the worldwide oil and natural
gas industry. The Company’s 34,000 employees today work in more
than 80 countries helping customers find, evaluate, drill, produce,
transport and process hydrocarbon resources. For more information
about Baker Hughes, visit: www.bakerhughes.com
About CSL Capital
CSL Capital Management is an SEC-registered private equity firm
founded in early 2008 and headquartered in Houston, TX. Since its
inception, CSL Capital Management has raised in excess of $1.3
billion in equity capital and commitments across various investment
vehicles. CSL Capital Management is currently investing out of CSL
Energy Opportunities Fund II, L.P. CSL’s current portfolio includes
several de novo, growth, recapitalization, and other
investments.
About Goldman Sachs’ Merchant Banking Division
Founded in 1869, The Goldman Sachs Group, Inc., is a leading
global investment banking, securities and investment management
firm. Goldman Sachs’ Merchant Banking Division (MBD) is the primary
center for the firm’s long-term principal investing activity. With
nine offices across seven countries, MBD is one of the leading
private capital investors in the world with equity and credit
investments across corporate, real estate, and infrastructure
strategies. Since 1986, the group has invested approximately $180
billion of levered capital across a number of geographies,
industries and transaction types.
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for Baker HughesMedia Relations:Melanie Kania, +1
713-439-8303melanie.kania@bakerhughes.comorInvestor
Relations:Alondra Oteyza, +1
713-439-8822alondra.oteyza@bakerhughes.comorGeneral
questions:info@bjservices.com
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