KLX Energy Services Holdings, Inc. has completed the acquisitions of Red Bone Services, a premier provider of oilfield services primarily in the Mid-Con, providing, non-frac high pressure pumping, thru-tubing, fishing and certain other services, and Tecton Energy Services, a leading provider of flowback, drill-out and production testing services, operating primarily in the greater Rocky Mountains.
The aggregate acquisition price of the Red Bone and Tecton acquisitions was approximately $82 million, comprised of approximately 2.1 million shares of the Company’s common stock and $14.5 million in cash to the sellers, plus approximately $14.5 million for the retirement of debt, representing a multiple of approximately 4.8 times the companies’ combined full year 2018 EBITDA. The Company expects to realize annualized EBITDA synergies of approximately $12 million representing a proforma synergized EBITDA multiple of approximately 3 times EBITDA. The shares are subject to restrictions on public re-sale from a minimum of 6 months to a maximum of 24 months, subject to acceleration upon the occurrence of certain events. Both companies have very low capital intensity.
Amin J. Khoury, Chairman and Chief Executive Officer of KLX Energy Services stated,
“The acquisitions of Red Bone and Tecton are value-creating transactions for our shareholders and further advance our strategic priorities to grow our customer base and to enhance and broaden out the services we provide to our customers. The Red Bone acquisition provides KLX Energy Services with a substantially stronger geographical presence in the Mid-Con, along with important potential market synergies as we roll out our broad portfolio of services to Red Bone’s customers. Both Red Bone and Tecton have strong relationships with quality customers, which provides significant cross-selling opportunities.”
Mr. Khoury continued,
“The addition of the Red Bone team, which has deep roots and an excellent reputation in the Mid-Con, is expected to facilitate the roll out of our broad range of product service lines to an expanded, high quality customer base. The addition of the Tecton business and its highly competent operating team creates the opportunity to roll out Tecton’s flowback, filtration and testing services to our other geographic regions.”
The Company is raising its fiscal year 2019 revenue and Adjusted EBITDA guidance to approximately $800 million in revenues and $200 million in Adjusted EBITDA to reflect a portion of the contribution of the acquisitions over the balance of the year.