Basic Energy Services Acquires NexTier’s Well Services Business For $94 Million

Basic Energy Services Inc. acquired the production operations from NexTier Oilfield Solutions Inc. on March 9 as Basic positions itself as the leading well servicing provider in the U.S.

In a news release, Basic said it paid about $94 million for the NexTier production operations, which the company plans to fund through a combination of cash and notes that includes proceeds from the previously announced sale of its pumping services assets.

The NexTier production operations, known as C&J Well Services, is the third-largest rig servicing provider in the U.S. Combined, Basic expects to achieve $17 million in annual run-rate cost synergies.

“This transaction solidifies Basic’s foundation to become the leading and most trusted production services provider in the country,” Keith L. Schilling, president and CEO of Basic, said in a statement.

Similar to other oilfield service providers, Basic has been impacted by declining U.S. shale activity over the past year as operators pull back on drilling activity to focus on shareholder returns. As a result, Basic announced a plan in mid-December to divest its pumping services assets in multiple transactions. Expected proceeds of between $30 million and $45 million were earmarked for redeployment into the Fort Worth, Texas-based company’s core production-focused businesses of well servicing and water logistics.

“Starting with the near-complete sale of our pumping services assets, we have taken important steps to bolster our core production-focused businesses, enhance our credit profile and ultimately position the company for future growth and leadership,” Schilling added in his statement.

C&J Well Services was originally established in San Angelo, Texas, in 1948 by Frank Pool, founder of Pool Well Servicing. Last year, C&J Energy combined with rival pressure pumper Keane Group Inc. in an all-stock merger forming NexTier. The company currently has a leading well servicing footprint in California and comes with a blue-chip customer base, according to the Basic news release.

Together, Basic’s workover fleet will grow to 411 high spec rigs with nearly 5,000 employees across 11 states including expanded footprints in the Permian Basin, California and other key oil basins, which Schilling said positions Basic to increase stockholder value.

“Importantly, we expect our increased operating scale, enhanced credit metrics and strong cash flow generation will enable the company to continue to de-lever while remaining a disciplined but active participant in the ongoing consolidation occurring in our industry,” he said.

As part of the acquisition, Jack Renshaw, who served as a senior vice president at C&J Well Services, joined Basic to lead the company’s newly formed Western Region, consisting of all California and Rocky Mountain operations. Jim Newman, senior vice president of Basic’s region operations, will continue to oversee operations in the Permian and Central regions, as well as Agua Libre Midstream.

Meanwhile, Adam Hurley, current vice president of strategy and business development of Basic, will take on the role of chief integration officer. Hurley will be responsible for overseeing the integration process, including optimizing the combined business model and extracting cost synergies.

Morgan Stanley & Co. LLC served as Basic’s financial adviser for the transaction. Weil, Gotshal & Manges LLP was the company’s legal adviser. Additionally, Lazard is serving as financial adviser to the special committee of the board of Basic.

Sam Langford and Tim Day agreed to resign from their roles on the Basic board, which expanded to include seven directors, in connection with the closing of the transaction. Joining the board will be Larry First and two additional members appointed by Ascribe Capital, which provided a bridge financing to partially fund the acquisition.