STEP Energy Services says that its US subsidiary, STEP Energy Services (USA) Ltd, has acquired four high-spec, ultradeep capacity coiled tubing units, ancillary equipment, and the divisional leadership and operational personnel from ProPetro Holding Corp – a leading Permian Basin energy services company – for approximately CAD$17.2 million.
The Acquisition solidifies STEP as North America’s leading provider of deep capacity coiled tubing services, with a large footprint and deep expertise in the Permian Basin and other oil and gas producing areas in the southern US.
The ProPetro coiled tubing units are among the deepest capacity units in service in the US today, capable of handling 30,000 feet of 2-3/8” and 2-5/8” strings of coiled tubing. The units were manufactured within the last four years.
Three units are currently crewed and active with leading Permian E&P companies while the fourth requires minor capital upgrades prior to deployment, which is expected in 2023. These units and their crews have a very strong reputation in the field and are primarily used to drill out plugs in complex, extended lateral wells.
In addition to the four ultradeep coiled tubing units, the acquisition includes a large fleet of support equipment, including fracturing pumps, twin fluid pumpers, nitrogen pumpers and transports, cranes, tractors, and other miscellaneous equipment and inventory.
The fracturing horsepower is required to support the fluid pumping requirements for the ultradeep capacity coiled tubing units. Similarly, the nitrogen pumpers are primarily used to support coiled tubing operations but can also be used in fracturing or industrial service applications.
Steve Glanville, STEP’s president and chief operating officer, said: “We have tremendous respect for the coiled tubing business that the ProPetro team has built.
“Lateral lengths in the Permian continue to increase and these four units, along with the highly skilled team of professionals who operate the equipment, build on STEP’s ability to service this market segment. Furthermore, the outlook for the coiled tubing market is improving rapidly as smaller competitors are consolidated and pricing moves higher. We are excited about how this acquisition will drive higher returns from our US division.”
The acquisition was funded by a combination of $2.77 million in cash and the issuance of 2,616,460 STEP common shares at a deemed price of $5.204 per share, calculated using the 30-day volume weighted average price of STEP common shares ending August 26, 2022.
The shares issued pursuant to the Acquisition are subject to a resale restriction period of four months, applicable US resale restrictions, as well as restrictions on the number of shares that can be sold on a monthly basis thereafter.
Based on current market dynamics STEP expects cash flow generated from the acquisition to pay back the company’s initial investment in 18 to 24 months.
For more information visit www.stepenergyservices.com
