Despite the precipitous drop in oil prices, the Keane Group will purchase the US division of a Canadian oil field services company in a bid to grow the company.
James Stewart, CEO of Keane, said that the purchase will more than double the size of the small oil field company.
Last month the two companies, Keane and Trican Well Services, a pressure pumping business based in Calgary, announced that they were in advanced negotiations discussing purchase. The final agreement features Keane paying $200 million in cash for Trican, plus a 10 percent stake in the shares of Keane Group Holdings. The total value of the deal equals $247 million. The deal should be finalized by the middle of March.
“We’ve been a small, well-capitalized completion services company,” Stewart said. “And now is a good time to consolidate. We’re in a unique position … to potentially roll up more companies.”
The finalization of the deal will allow Keane improved access in the Eagle Ford Shale in South Texas and some of Oklahoma and Kansas. It will also allow Keane a stronger presence in the Permian Basin in West Texas and the Bakken Shale in North Dakota.
“As the market rebounds, we’ll be well positioned,” Stewart said, emphasizing the importance of the “untapped potential” still remaining in the Permian.