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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