Houston’s Superior Energy Services Inc. is combining its U.S. land services lines into a platform in combination with Forbes Energy Services Ltd. as it turns its focus to the domestic offshore and international markets.
Superior agreed to divest its U.S. service rig, coiled tubing, wireline, pressure control, flowback, fluid management and accommodations service lines and combine them with Forbes’ complementary service lines to create a publicly traded consolidation platform for domestic completion, production and water solutions.
Superior also is winding down its hydraulic fracturing services to eventually discontinue the business.
“Superior Energy will now be focused on international and offshore markets, allowing investors to more accurately assess the value of what we believe to be a highly differentiated public company in the oilfield service space,” CEO David Dunlap said. “We believe this transaction, which reduces debt, and lowers interest costs, is a meaningful step toward our goal of improving our ability to generate free cash flow.
“The company and its shareholders will have a meaningful equity ownership position in a U.S. land service consolidation vehicle that will operate with a light capital spending profile, and is positioned to generate free cash flow. We believe that there are opportunities to reduce corporate costs, improve asset management and increase free cash flow generation through increased industry consolidation.”
The Forbes combination, for now branded as Newco, is expected to be completed by the end of March. Superior would own 65% of the entity, with Forbes controlling 35%.
Dunlap plans to step down as Superior’s chief to take the helm of Newco. Superior CFO Westy Ballard is succeeding Dunlap as president and CEO. Dunlap is expected to also serve as chairman of a four-person board, with other board members to be identified before the transaction is closed.
Once the transaction is completed, Superior would remain a globally diversified oilfield services company built around premium drill pipe, bottomhole assemblies, completion tools/products, hydraulic workover, snubbing/production services and well control services. More than 75% of Superior’s combined revenue during 3Q2019 was generated from U.S. offshore and international markets.
Newco is to be headquartered in Houston, with support services provided by Superior for up to two years under a transition services agreement. Once the transaction is completed, Newco would operate under a new corporate name and ticker symbol.
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