Tulsa-based Reliance Oilfield Services LLC said Wednesday it is paying an undisclosed amount for FMC Technologies Inc.’s wireline services business in Canada and the United States, expanding its completions service lines across North America.
The acquisition would complement existing operations of the firm, formed in 2004 to provide high pressure control tools and services to the oil and gas industry.
“This is a compelling transaction because it is aligned with our company’s vision to have the highest caliber teams in each of our operating areas,” Reliance CEO Austin Roberts said. Reliance intends to offer employment to most of the FMC wireline employees. “We’re building our company on great people, and that’s what this deal is really about,” Roberts said.
FMC’s Brad Gabel, under whose leadership the legacy wireline business was built, is joining Reliance as executive chairman.
“FMC Technologies’ highly experienced wireline management team that is joining Reliance brings excellent relationships with both operational staff and customers,” Gable said. “I’m enthusiastic about the opportunity to have the expanded Reliance team provide a platform to meet our customers’ current needs and grow as market conditions improve.”
Through its partnership with Dallas-based private equity Edge Natural Resources LLC, Reliance is able to retain “a healthy balance sheet and position ourselves to take advantage of a difficult time in the industry,” Roberts added.
The acquisition is expected to be completed before the end of June.
Houston-based FMC is best known as a subsea systems provider, but it also markets technology and services in the onshore. At the end of March FMC employed about 16,500 people and had 29 major production facilities, with services based in 18 countries. The surface technologies unit houses wireline, offers perforating, well integrity, reservoir analysis and production logging. In addition to conventional wireline services, FMC offers fiber optic sensing technology combining temperature and acoustic data to provide dynamic flow profiling, fracture optimization and enhanced oil recovery monitoring.
Like its peers, FMC’s results in 1Q2016 fell sharply year/year, with revenue down 29%. In the surface technologies unit, revenue fell 41% primarily because of a “significant decline in North American land activity” and “less favorable pricing,” management said. Surface technologies inbound orders for the first quarter were $258.5 million, with a backlog of $429.4 million.
During a conference call in April to discuss first quarter results, CFO Maryann Mannen said the surface technologies segment was being restructured “based in part on a planning forecast for 2016 that assumed the U.S. rig count would decline to approximately 500 working rigs during the first quarter and then maintain that level for the remainder of the year. The actual rig count decline proved to be even more severe than we anticipated, declining 36% from year-end levels to just 450 rigs at quarter end. The rig count has since declined to 431 rigs as of the end of last week.
“While we have made good progress in adjusting to the lower activity levels in North America, the severity of the rig count decline will require us to take further actions,” she said. “However, these actions will be balanced against our need to preserve operational capabilities that can respond to the market recovery.”
FMC this week appointed CEO Douglas J. Pferdehirt, 52, as chairman, effective Sept. 1. Pferdehirt, who joined FMC after a 26-year career at Schlumberger Ltd., would succeed John T. Gremp, 64, who is to continue to serve as chairman while the company completes its transition to the new CEO.
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