Houston-based Sentinel Energy Services Inc., launched last year by Schlumberger Ltd.’s former CEO and a top lieutenant, laid plans Friday to take over North American pipeline services company Strike LLC in a merger valued at $854 million.
Strike, headquartered in The Woodlands north of Houston, is the first acquisition by the energy-focused special purchase acquisition company, which launched as a public company late last year.
Sentinel plans to take the company public and trade on the New York Stock Exchange as Strike Inc. under the ticker “STRK.”
Strike’s “service lines, operating and safety record represent a unique opportunity to address the rapidly growing market for pipeline and facilities infrastructure and integrity services,” Sentinel Chairman Andrew Gould said. “The industry is poised to embark on a secular growth phase to build out the infrastructure needed to service the growing global demand for oil and gas that will feed U.S. exports for years to come.” Strike “is uniquely positioned to take advantage of this trend.”
Gould retired from Schlumberger in 2012 as chairman and CEO after a 36-year career. He went on to become nonexecutive chair of BG Group plc for four years until it was sold to Royal Dutch Shell plc. Sentinel CEO Krishna Shivram spent 25 years with Schlumberger, stepping down as vice president and treasurer in 2013 to join Weatherford International plc as CFO. He was appointed Weatherford’s interim CEO in 2016 until his departure in 2017.
Sentinel, backed with private equity funding from Sentinel Management Holdings LLC, an affiliate of CSL Capital Management LP, said the transaction is subject to approval by Sentinel shareholders and other customary closing conditions.
Founded in 2003 by CEO Steve Pate and his partners, Strike LLC provides full-life cycle pipeline infrastructure services across North America, including new construction, make-ready, testing, inspection, maintenance, repairs, rehabilitation, upgrades, facility construction and reconnection.
Between 2007 and 2017, Strike generated estimated compound annual revenue growth of more than 35% with estimated 2018 revenues of forecast at $1.8 billion, according to Sentinel.
Following its initial public offering last year, Sentinel management began its search for “attractive assets” that would benefit from Gould's and Shivram's operating experience, industry connections and approach to business as well as CSL's energy services industry focus and network of relationships.”
Following the closing, the business would continue to be led by Strike's existing management team. The Sentinel board would consist of seven members, led by Gould as chairman and also include Shivram, Pate, Charles Leykum, Lee Gardner, Marc Zenner and Jon Marshall.
"Over the last 15 years, our employees have worked hard to earn Strike's reputation as the leading provider of safe, full life cycle pipeline and facilities infrastructure services,” Pate said. “Our client-focused solutions have enabled long-term client partnerships, and we see our differentiated technical expertise and execution capabilities as competitive advantages going forward.
“Now, as we seek to scale, expand and add to our successes, this merger allows us to do so as a publicly traded entity with a strong balance sheet and access to capital markets.”