THE WOODLANDS, Texas,
June 7, 2017 /PRNewswire/
-- Layne Christensen Company, (NASDAQ: LAYN) ("Layne"
or the "Company"), the largest water well drilling company in
the United States and a leading
provider of water infrastructure solutions, today announced its new
energy infrastructure business and the construction of a new
high-capacity water pipeline and infrastructure system to serve
energy producers in the prolific producing Delaware Basin of West Texas.
Michael J. Caliel, President and
Chief Executive Officer of Layne, commented, "This infrastructure
business is an expansion of our water-focused platform, leveraging
our extensive experience to better serve the rapidly growing
demands for water in the energy sector. The recent increase in
drilling activity, coupled with technology advancements driving
greater horizontal lateral lengths, are creating a growing demand
for water in fracking operations. Today, many fracking operations
require between 500,000 and 700,000 barrels of water per well
completion. Based upon industry forecasts of longer lateral
lengths and increasing drilling activity, we expect water usage
within the energy sector to more than double over the next two
years, with much of the demand in areas such as the Delaware Basin.
"Layne's 135 years of experience in water sourcing, drilling and
treatment provides us with a unique advantage over many industry
competitors. This new investment is part of our longer-term
strategy to leverage our substantial know-how in providing water
infrastructure solutions to our clients. Our process of supplying
water to energy producers through large capacity infrastructure
under the Layne banner is a logical extension of our diversified
end-market strategy serving clients in the municipal, agricultural
and industrial sectors."
J. Michael Anderson, Layne's
Chief Financial Officer, who joined Layne in 2015 with extensive
energy service and infrastructure experience, added, "We believe
the combination of Layne's broad water expertise with our
recently-created energy infrastructure team will enable us to
generate attractive financial returns and grow this important
business over the coming years."
The water infrastructure system, which is currently in the final
stages of construction, is anchored by nearly 1,000 acres of
Company-owned, highly-productive water-producing land near
Pecos, TX and will include wells,
pump stations and in-ground storage facilities. The system
encompasses more than 20 miles of high-capacity water pipeline
extending northward towards Orla,
TX into one of the most active oil and gas drilling areas in
the United States. The system has initial production and
delivery capacity of 100,000 barrels per day of non-potable water,
with significant capacity to support further expansion from both
additional water sources and delivery points. The capital
investment for the system is approximately $18 million.
Water sales are expected to commence during Layne's fiscal third
quarter. Once operational, financial returns from the system
are anticipated to be immediately accretive to cash flow and
earnings. Layne's returns are back-stopped through an initial
four-year contract containing minimum volume purchases from a large
publicly-traded independent oil and gas producer that is actively
drilling in the area. While the initial contract is expected
to ensure adequate financial returns for Layne, the Company
anticipates being able to deliver additional water volumes to other
producers in the area and expand its capacity over time.
Forward-Looking Statements
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Exchange Act of 1934. Such statements may
include, but are not limited to, statements of plans and
objectives, statements of future economic performance and
statements of assumptions underlying such statements, and
statements of management's intentions, hopes, beliefs, expectations
or predictions of the future. Forward-looking statements can
often be identified by the use of forward-looking terminology, such
as "should," "intend," "continue," "believe," "may," "hope,"
"anticipate," "goal," "forecast," "plan," "estimate" and similar
words or phrases. Such statements are based on current expectations
and are subject to certain risks, uncertainties and assumptions,
including but not limited to: prevailing prices for various
commodities, unanticipated slowdowns in the Company's major
markets, the availability of credit, the risks and uncertainties
normally incident to the industries of operation, the impact
of competition, the effect of any deregulation or other initiatives
by the Trump Administration, the effectiveness of operational
changes expected to increase efficiency and productivity, the
availability of equity or debt capital needed for our business,
including the refinancing of our existing indebtedness as it
matures, worldwide economic and political conditions and foreign
currency fluctuations that may affect worldwide results of
operations. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially and adversely from those
anticipated, estimated or projected. These forward-looking
statements are made as of the date of this filing, and the Company
assumes no obligation to update such forward-looking statements or
to update the reasons why actual results could differ materially
from those anticipated in such forward-looking statements.
About Layne
Layne is a global water management, infrastructure services and
drilling company, providing responsible solutions to the world of
essential natural resources — water, minerals and energy. We
offer innovative, sustainable products and services with an
enduring commitment to safety, excellence, and integrity.
Contacts
J. Michael Anderson
Chief Financial Officer
281-475-2694
michael.anderson@layne.com
Dennard Lascar Associates
Jack Lascar
713-529-6600
jlascar@dennardlascar.com
[LAYN-G]
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SOURCE Layne Christensen Company