Keane Group, Inc. (“Keane”) announced that it has entered into
an agreement to acquire RockPile Energy Services, LLC (“RockPile”),
a provider of high-quality completion services. Once completed, the
transaction will result in an increase in the size of Keane’s
fleet, one of the largest and most modern pressure pumping fleets
in the United States, by 26% with approximately 1.2 million total
hydraulic fracturing horsepower strategically located across the
most prolific U.S. shale basins.
Under the terms of the agreement, Keane will acquire all issued
and outstanding shares of RockPile in a cash and stock transaction.
Fixed cash and stock consideration, based on the current trading
price of Keane’s common stock and subject to certain purchase price
adjustments, is approximately $284.5 million, comprised of (i) $135
million in cash, (ii) approximately 8.7 million shares of Keane’s
common stock and (iii) approximately $26.5 million for capital
expenditures (including $9 million in deposits previously paid by
RockPile and to be reimbursed by Keane at closing) for 30,000
previously ordered hydraulic fracturing horsepower. The new
horsepower is expected to be delivered and deployed to the Bakken
in the fourth quarter of 2017 under a dedicated agreement with an
existing customer.
The $135 million cash component of the acquisition, the $9
million capital expenditure reimbursement and fees and expenses
will be funded with $135 million of additional term loans, together
with cash from Keane’s balance sheet. The remaining $17.5 million
of the $26.5 million total capital expenditures for the new
horsepower will be funded by operating cash flow throughout the
build cycle.
Further, subject to certain conditions, the agreement includes
contingent consideration of up to $20 million (or $2.30 per share
of common stock issued to the sellers in the transaction) through a
contingent value right if the trading price of Keane’s common stock
is less than $19.00 a share during a trading period ending on the
nine-month maturity date of the right.
The acquisition is expected to be completed by July 31, 2017,
subject to standard regulatory approvals and satisfaction of
customary closing conditions.
RockPile Operations Overview
Founded in 2011, RockPile is an integrated provider of
high-quality completions services, primarily providing hydraulic
fracturing solutions with integrated wireline in the prolific
Bakken and Permian basins. The company also provides workover and
remedial well service and cementing. RockPile owns 245,000
hydraulic fracturing horsepower, 8 wireline trucks, 12 workover
rigs and 10 cement units. RockPile’s completion assets are
currently 100% utilized and deployed under market responsive
agreements with high quality customers.
RockPile’s total fleet of 245,000 hydraulic fracturing
horsepower includes 30,000 horsepower of Tier 4 units previously
ordered by RockPile and scheduled for delivery in the fourth
quarter of 2017. The company’s active hydraulic fracturing
horsepower of 215,000 HHP is currently deployed approximately 50%
each in the Bakken and the Permian.
Management Commentary
“We have always held RockPile in high regard due to their
commitment to quality service in the field, their well-maintained
assets and facilities, and the talent they have throughout their
organization,” said James Stewart, Chairman and Chief Executive
Officer of Keane. “We are excited to have the RockPile team join
the Keane family and look forward to what we can accomplish
together.”
“We look forward to joining Keane as our companies share common
values and commitment to safety, service, technology and
operational excellence,” said Curt Dacar, Chief Executive Officer
of RockPile. “This transaction provides both our customers and
employees with enhanced opportunities for growth and success.”
“We are very pleased to reach this agreement with an
industry-leading team that has a reputation for best-in-class
equipment, performance and safety,” said Jim Meneely, Partner of
White Deer. “We are confident that we will continue to benefit
through the combined growth of our businesses, as evidenced by
White Deer retaining a material portion of consideration in the
form of Keane stock. We envision a combined company that will set
the standard for service quality and operational efficiency.”
“The strategic acquisition of RockPile is the outcome of Keane’s
disciplined M&A strategy focusing on prudent growth through
industry consolidation in a tightening services market,” said Greg
Powell, President and Chief Financial Officer of Keane. “The
combination allows Keane to further capitalize on the shifting
industry fundamentals, where customers are increasingly focused on
efficiency and high-quality execution at a time when we have line
of sight into full utilization of our completion assets by the end
of the year. We are acquiring for approximately $1,000 per
horsepower – in line with newbuild cost – for a fully utilized
completions platform with customers, talent, facilities and cash
flow that is complementary to our existing service offerings.”
Conference Call
Keane will host a conference call on May 19, 2017, at 7:30 a.m.
Central Time (8:30 a.m. Eastern Time) to discuss the transaction.
Hosting the call will be James C. Stewart, Chairman and Chief
Executive Officer and Greg L. Powell, President and Chief Financial
Officer. The call can be accessed live over the telephone by
dialing (877) 407-9208 or, for international callers, (201)
493-6784. A replay will be available shortly after the call and can
be accessed by dialing (844) 512-2921 or, for international callers
(412) 317-6671. The passcode for the replay is 13662940. The replay
will be available until June 2, 2017.
A copy of Keane’s prepared remarks will be posted prior to the
call on Keane’s website under the Events and Presentation page at
http://investors.keanegrp.com/events-and-presentations.
About RockPile Energy Services
Headquartered in Denver, Colorado, RockPile Energy Services is a
growth-oriented oil services company providing completions
solutions to oil and gas exploration and production companies in
the Williston and Permian Basins. RockPile’s unique suite of
capabilities and technologies deliver improved well economics to
clients operating in the most challenging basins in North America.
The Company’s service offerings include hydraulic fracturing, cased
hole wireline, ancillary pump services and workover rig
services.
About Keane Group, Inc.
Headquartered in Houston, Texas, Keane is one of the largest
pure-play providers of integrated well completion services in the
U.S., with a focus on complex, technically demanding completion
solutions. Keane’s primary service offerings include horizontal and
vertical fracturing, wireline perforation and logging and
engineered solutions, as well as other value-added service
offerings. Keane owns approximately 944,000 hydraulic fracturing
horsepower and 23 wireline trucks and provides engineered
solutions. Keane’s broad geographic footprint spans the most
prolific U.S shale basins including the Permian, Bakken,
Marcellus/Utica, and SCOOP/STACK. Keane prides itself on its
outstanding employee culture, its efficiency and its ability to
meet and exceed the expectations of its customers and communities
in which it operates.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements which are
protected as forward-looking statements under the Private
Securities Litigation Reform Act of 1995 that are not limited to
historical facts, but reflect Keane Group, Inc.’s (“Keane” or the
“Company”) current beliefs, expectations or intentions regarding
future events, including statements about the proposed acquisition
by Keane of RockPile Energy Services, LLC (“RockPile”) (the
“proposed transaction”). Words such as “may,” “will,” “could,”
“should,” “expect,” “plan,” “project,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “pursuant,”
“target,” “continue,” and similar expressions are intended to
identify such forward-looking statements. The statements in this
press release that are not historical statements, including
statements regarding the expected timetable for completing the
proposed transaction, benefits and synergies of the proposed
transaction, costs and other anticipated financial impacts of the
proposed transaction; capitalization and debt of Keane in
connection with the proposed transaction, the combined company’s
plans, objectives, future opportunities for the combined company
and services, future financial performance and operating results
and any other statements regarding Keane’s future expectations,
beliefs, plans, objectives, financial conditions, assumptions or
future events or performance that are not historical facts, are
forward-looking statements within the meaning of the federal
securities laws. These statements are subject to numerous risks and
uncertainties, many of which are beyond Keane’s control, which
could cause actual results to differ materially from the results
expressed or implied by the statements. These risks and
uncertainties include, but are not limited to: the timing to
consummate the proposed transaction; satisfaction of the conditions
to closing of the proposed transaction may not be satisfied or that
the closing of the proposed transaction otherwise does not occur;
the risk that a regulatory approval that may be required for the
proposed transaction is not obtained or is obtained subject to
conditions that are not anticipated; the diversion of management
time on transaction-related issues; the ultimate timing, outcome
and results of integrating the operations of Keane and RockPile;
the effects of the business combination of Keane and RockPile,
including the combined company’s future financial condition,
results of operations, strategy and plans; potential adverse
reactions or changes to business relationships resulting from the
announcement or completion of the proposed transaction; expected
synergies and other benefits from the proposed transaction and the
ability of Keane to realize such synergies and other benefits;
expectations regarding regulatory approval of the transaction;
results of litigation, settlements and investigations; actions by
third parties, including governmental agencies; volatility in
customer spending and in oil and natural gas prices, which could
adversely affect demand for Keane’s and RockPile’s services and
their associated effect on rates, utilization, margins and planned
capital expenditures; global economic conditions; excess
availability of pressure pumping equipment, including as a result
of low commodity prices, reactivation or construction; liabilities
from operations; decline in, and ability to realize, backlog;
equipment specialization and new technologies; adverse industry
conditions; adverse credit and equity market conditions; difficulty
in building and deploying new equipment; difficulty in integrating
acquisitions; shortages, delays in delivery and interruptions of
supply of equipment, supplies and materials; weather; loss of, or
reduction in business with, key customers; legal proceedings;
ability to effectively identify and enter new markets; governmental
regulation; and ability to retain management and field
personnel.
Additional information concerning factors that could cause
actual results to differ materially from those in the
forward-looking statements is contained from time to time in
Keane’s Securities and Exchange (“SEC”) filings, including the most
recently filed Forms 10-Q and 10-K. Keane’s filings may be obtained
by contacting Keane or the SEC or through Keane’s web site at
http://www.keanegrp.com or through the SEC’s Electronic Data
Gathering and Analysis Retrieval System (EDGAR) at
http://www.sec.gov. Keane undertakes no obligation to publicly
update or revise any forward-looking statement.
Additional Information
Nothing in this press release shall constitute a solicitation to
buy or an offer to sell shares of Keane’s common stock.
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