Keane Group, Inc. (“Keane” or the “Company”) today announced that it has
placed orders for approximately 150,000 newbuild hydraulic horsepower,
representing three additional hydraulic fracturing fleets, which will
increase its position as a leading provider of completions services in
the U.S.
“Supply and demand fundamentals for U.S. oil and gas well completions
remain highly constructive for quality completions service providers,”
said James Stewart, Chairman and Chief Executive Officer of Keane.
“Favorable conditions have continued to improve throughout the year, and
robust 2018 capital budgets announced by producers in recent weeks have
amplified and validated the growing demand for our services, which
remains in excess of supply. This visibility, coupled with additional
pricing improvements, provide the firmness of demand and favorable
economics we require to deploy newbuild capital and further our growth
trajectory. Given the deployment of all of our previously idled
horsepower in 2017, and our partnership with the largest and most
efficient customers, we are well positioned to preemptively extend our
growth and capitalize on a tightening supply chain. In response, we made
the strategic decision to place orders for three additional Tier 4
hydraulic fracturing fleets and wireline trucks, which we expect to
deploy in the Permian Basin in response to strong demand. Once
delivered, these additional fleets will increase our total hydraulic
horsepower to more than 1.3 million, with nearly 800,000 hydraulic
horsepower in the Permian Basin concentrated in the Delaware Basin.”
“Improving market signals throughout 2017 have resulted in customer
discussions regarding committed newbuild fleets with pricing that now
satisfies our margin requirements and capital return thresholds,” said
Greg Powell, President and Chief Financial Officer of Keane. “We are in
advanced discussions with both existing and new customers and expect to
execute dedicated agreements for the new fleets by the end of the first
quarter of 2018. Further, our established relationships with component
and assembly providers have allowed us to optimize newbuild cost and
secure beneficial delivery dates, with two fleets expected to be
delivered and deployed by the end of the second quarter of 2018, and a
third by the end of the third quarter of 2018. We expect these newbuilds
to initially generate annualized Adjusted Gross Profit per fleet of
greater than $20 million, representing attractive payback economics
consistent with our strategic plan. Total capital expenditures for the
three fleets will be approximately $115 million, or approximately $770
per hydraulic horsepower, and we intend to fund such capital
expenditures out of cash on hand and expected cash flow from operating
activities, as 20% of the cost is due on signing with the balance due
upon delivery. This favorable price per hydraulic horsepower is driven
by our established supplier relationships, timing of orders, as well as
technological advancements to optimize our wellsite footprint. We expect
that growth from these newbuilds, in addition to the profitability for
our existing 26 fleets, will generate attractive cash flow in 2018. We
remain committed to assessing all potential opportunities to maximize
shareholder value over the near and long-term, including organic growth,
acquisitions, capital return and debt repayment.”
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, engineered solutions, and cementing,
as well as other value-added service offerings. Keane currently owns
approximately 1.2 million hydraulic fracturing horsepower and 31
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.
Definitions of Non-GAAP Financial Measures
Keane has included both financial measures compiled in accordance with
GAAP and certain non-GAAP financial measures in this press release,
including Adjusted Gross Profit. Adjusted Gross Profit provides
supplemental information which Keane believes is useful to analysts and
investors to evaluate its ongoing results of operations, when considered
alongside GAAP measures such as net income and operating income.
Adjusted Gross Profit excludes the financial impact of items management
does not consider in assessing Keane’s ongoing operating performance,
and thereby facilitate review of Keane’s operating performance on a
period-to-period basis. Other companies may have different capital
structures, and comparability to Keane’s results of operations may be
impacted by the effects of acquisition accounting on its depreciation
and amortization. As a result of the effects of these factors and
factors specific to other companies, Keane believes Adjusted Gross
Profit provides helpful information to analysts and investors to
facilitate a comparison of its operating performance to that of other
companies.
Adjusted Gross Profit is defined as net income (loss) adjusted to
eliminate the impact of interest, income taxes, depreciation and
amortization, along with certain items management does not consider in
assessing ongoing performance, further adjusted to eliminate the impact
of all activities in the Corporate segment, such as selling, general and
administrative expenses, along with cost of services that management
does not consider in assessing ongoing performance.
Forward-Looking Statements
The statements contained in this release that are not historical
facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. 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
Company’s plans, objectives, future opportunities for the Company’s
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 operations of Keane; the anticipated funding and expected
delivery of the newbuild fleets; 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
completion of the RockPile transaction; expected synergies and other
benefits from the transaction and the ability of Keane to realize such
synergies and other benefits; 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 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;
weather; decline in, and ability to realize, backlog; equipment
specialization and new technologies; shortages, delays in delivery and
interruptions of supply of equipment and materials; ability to hire and
retain personnel; loss of, or reduction in business with, key customers;
difficulty with growth and in integrating acquisitions; product
liability; political, economic and social instability risk; ability to
effectively identify and enter new markets; cybersecurity risk;
dependence on our subsidiaries to meet our long-term debt obligations;
variable rate indebtedness risk; and anti-takeover measures in our
charter documents.
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 Commission (“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 website 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171214005454/en/
Copyright Business Wire 2017
