Completed its Monarch Silica Sand Mine
Acquisition in the Eagle Ford
Continues to Execute on its Strategic
Growth Plan
WILLOW
PARK, Texas, Dec. 27,
2022 /PRNewswire/ -- ProFrac Holding Corp.
(NASDAQ: ACDC) ("ProFrac" or
the "Company") today reported that it has closed its
previously-announced acquisition of the Eagle Ford sand mining
operations of Monarch Silica, LLC ("Monarch"), and announced that
it has entered into definitive agreements to acquire two companies
that will grow its pressure pumping footprint and sand mine
portfolio.
ProFrac continues its "Acquire, Retire, Replace" strategy
with the acquisition of a high-quality, Rockies-focused pressure
pumper.
The Company's subsidiary, ProFrac Holdings II, LLC, has entered
into a definitive agreement to acquire REV Energy Holdings, LLC
("REV"), a privately owned pressure pumping service provider with
operations in the Rockies and Eagle Ford. Under the terms of
the agreement, ProFrac will acquire REV for $140 million, consisting of $70 million in ProFrac Class B common shares,
approximately $39 million in
seller-provided financing, and the balance with cash on hand and
debt assumption of approximately $5.5
million. The purchase agreement also provides for up
to $20 million of earn-out payments
in the event REV achieves EBITDA of approximately $90 million in 2023. The transaction is
expected to close before the end of January
2023.
REV operates three premium frac fleets totaling 204,500
hydraulic horsepower that offer significant opportunity for
upgrades through the additions of DGB engines and engine idle
reduction systems. The acquisition will expand ProFrac's
presence in both the Rockies and South
Texas and is further demonstration of ProFrac's "acquire,
retire and replace" strategy.
Ladd Wilks, ProFrac's Chief
Executive Officer, added, "We are pleased to be acquiring REV, a
company with a track record for high-quality service as well as
safety and efficiency. REV operates three fleets consisting
of mostly modern Tier IV conventional pumps that can be converted
into next-generation assets through DGB upgrades. We are
excited for the future with REV and believe that both our customers
and shareholders will benefit from the combination."
ProFrac enhances its vertical integration strategy with
the acquisition of the leading proppant producer in the
Haynesville.
ProFrac also announced that its subsidiary, ProFrac Holdings II,
LLC, has entered into a definitive agreement with Performance
Holdings I, LLC and Performance Holdings II, LLC (collectively,
"Performance Proppants") to acquire the largest in-basin proppant
producer serving the Haynesville, for $475
million of cash. ProFrac expects the transaction to be
accretive to earnings and free cash flow immediately upon
closing. Based on preliminary discussions with capital
providers, including existing and potential new lenders, as well as
the Company's largest shareholders, ProFrac believes it will be
positioned to fund the acquisition with a combination of new
capital and cash from operations. Such preliminary
discussions are non-binding, and the Company cannot assure that it
will raise new capital from such discussions on a timely basis or
otherwise. The Company expects the acquisition to close in
the first quarter of 2023.
Matt Wilks, ProFrac's Executive
Chairman, commented, "Today is an exciting day at ProFrac, as we
have closed on the Monarch acquisition and are announcing
agreements to add two great businesses to the ProFrac
portfolio. We are thrilled for the unique opportunity to add
Performance Proppants to our growing portfolio of in-basin sand
mines. By acquiring Performance Proppants, we would add
approximately 10.4 million-tons-per-year of nameplate production
capacity in the Haynesville, where we currently operate six active
frac fleets. ProFrac is a long-term customer of Performance
Proppants and believes that the combination of Performance
Proppants' high-quality assets and strategic geographic positioning
with our internal manufacturing capabilities will provide ProFrac
with an unparalleled cost advantage in the Haynesville."
The acquisition of Performance Proppants further demonstrates
ProFrac's commitment to enhancing its capabilities and cost
structure through its vertical integration strategy. By
sourcing proppant internally from logistically-advantaged mines,
ProFrac expects to be in position to efficiently serve its
customers and minimize its input costs in a basin known for
demanding hydraulic fracturing jobs with high treating pressure and
large proppant loadings.
The consummation of both transactions is subject to customary
closing conditions, including, among others, the expiration or
termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Advisors
Brown Rudnick LLP and Lowenstein Sandler LLP are serving as
legal advisor and merger clearance counsel, respectively, to
ProFrac on the acquisition of REV. Piper Sandler is serving as REV's exclusive
financial advisor, and Sparkman + Foote LLP is serving as REV's
legal counsel.
Piper Sandler & Co. is
serving as exclusive financial advisor to ProFrac and Winston &
Strawn and Lowenstein Sandler LLP are serving as ProFrac's legal
advisor and merger clearance counsel, respectively, to ProFrac on
the acquisition of Performance Proppants. Stephens &
Company is serving as exclusive financial advisor to Performance
Proppants, and Brownstein Hyatt Farber
Schreck, LLP is serving as Performance Proppants' legal
counsel.
About ProFrac Holding Corp.
ProFrac Holding Corp. is a growth-oriented, vertically
integrated and innovation-driven energy services company providing
hydraulic fracturing, completion services and other complementary
products and services to leading upstream oil and gas companies
engaged in the exploration and production ("E&P") of North
American unconventional oil and natural gas resources. Founded in
2016, the Company was built to be the go-to service provider for
E&P companies' most demanding hydraulic fracturing needs.
ProFrac is focused on employing new technologies to significantly
reduce "greenhouse gas" emissions and increase efficiency in what
has historically been an emissions-intensive component of the
unconventional E&P development process. For more information,
please visit the Company's website,
https://www.pfholdingscorp.com.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release may be considered
"forward-looking statements" within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act
of 1995. In some cases, the reader can identify forward-looking
statements by words such as "may," "should," "would," "expect,"
"intend," "will," "estimate," "anticipate," "believe," "predict,"
or similar words. Forward-looking statements relate to future
events or the Company's future financial or operating performance.
These forward-looking statements include, among other things,
statements regarding: the anticipated benefits of the Monarch
acquisition; expectations regarding the Company's ability to fund
the purchase price of such acquisitions, and any other strategic
transactions the Company may enter into, in a sufficient and timely
manner and without impairing the Company's liquidity position; the
expected timing and anticipated benefits of the REV and Performance
Proppants acquisitions, including, with (i) respect to REV, the
Company's expectation that such acquisition will increase its
pressure pumping service capabilities, geographic footprint and
active fleet count; expectations regarding the Company's plans and
ability to upgrade the fleets to be acquired; and the Company's
expectations regarding the funding of the acquisition; and (ii)
with respect to Performance Proppants, the Company's expectations
regarding benefits associated with scaling the Company's vertically
integrated business model and increasing its nameplate production
capabilities, and the Company's estimates of future nameplate
production capacity; expectations about increasing value to
customers and realizing potential cost savings and geographic
advantages; the Company's expectation that the acquisition will be
accretive to the Company's earnings and free cash flow, and that
such accretion would occur immediately upon closing; and the
Company's expectation that the acquisition can be financed through
a combination of cash from operations and potential new capital.
Such forward-looking statements are based upon assumptions made by
the Company as of the date hereof and are subject to risks,
uncertainties, and other factors that could cause actual results to
differ materially from those expressed or implied by such
forward-looking statements. Factors that may cause actual results
to differ materially from current expectations include, but are not
limited to: the risk that the proposed REV and Performance
Proppants transactions may not be completed in a timely manner or
at all; the ability to effectively scale the Company's operations
and integrate acquired assets, services and personnel into the
Company's existing business model; the risk that Company will not
realize the anticipated benefits of the acquired businesses and
operations; the Company's ability to execute its business
strategy and plans for growth, including with respect to the
integration of Monarch and the completion of the REV and
Performance Proppants acquisitions; the failure to operationalize
and upgrade, as applicable, the acquired operations, services and
assets of REV and Performance Proppants in a timely manner or at
all; risks relating to the failure to satisfy the conditions to the
consummation of the REV and Performance Proppants transactions,
including the receipt of certain governmental and regulatory
approvals; risks associated with the Company's ability to fund the
REV and Performance Proppants acquisitions, and any other strategic
transactions the Company may enter into, which risks include that,
with respect to Performance Proppants, such transaction is not
subject to a financing contingency, there are currently no
commitments for any new capital financing, and the Company cannot
assure that it will raise any new capital, whether based on its
preliminary, non-binding discussions with existing and potential
new lenders, or the Company's largest shareholders, or otherwise,
in a sufficient manner, on favorable terms, on a timely basis, or
at all; risks relating to the Company's liquidity needs; industry
conditions, including fluctuations in supply, demand and prices for
the Company's products and services; global and regional economic
and financial conditions; and other risks and uncertainties set
forth in the sections entitled "Risk Factors" and "Cautionary Note
Regarding Forward-Looking Statements" in the Company's filings with
the Securities and Exchange Commission ("SEC"), which are available
on the SEC's website at www.sec.gov. There may be additional
risks about which the Company is presently unaware or that the
Company currently believes are immaterial that could also cause
actual results to differ from those contained in the
forward-looking statements. The reader should not place undue
reliance on forward-looking statements, which speak only as of the
date they are made. The Company anticipates that subsequent events
and developments will cause its assessments to change. However,
while the Company may elect to update these forward-looking
statements at some point in the future, it expressly disclaims any
duty to update these forward-looking statements, except as
otherwise required by law.
Contacts:
ProFrac Holding Corp.
Lance Turner – Chief Financial
Officer
Bryan Wheatly – Director, Investor
Relations
investors@profrac.com
Dennard Lascar Investor
Relations
Ken Dennard / Rick Black
ACDC@dennardlascar.com
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SOURCE ProFrac Holding Corp.