TIDMHTG
RNS Number : 7491I
Hunting PLC
15 December 2020
For Immediate Release 15 December 2020
Rival Acquires Hunting Subsidiary Assets To Increase US
Footprint and Support International Expansion
Acquisition of Assets of Hunting Energy Services Provides Rival
Downhole Tools With Strong Manufacturing Capabilities to Align with
Top Tier Engineering Expertise and Innovation
Houston: Hunting PLC (LSE:HTG) ("Hunting"), the international
energy services group and Rival Downhole Tools LC ("Rival"), a
leader in downhole drilling technologies, today announced that
Rival has acquired the operating assets of Hunting Energy Services
(Drilling Tools), Inc. ("HESDT"), a wholly owned subsidiary of
Hunting, in exchange for Hunting securing a minority equity
interest in Rival.
The complementary technologies, manufacturing, geographical
footprints and engineering capabilities of the combined
organizations - with 37 years' experience in downhole technologies
- will further establish Rival's market position as one of the top
downhole tool providers to the onshore U.S. market. In addition,
the deal will provide the catalyst for future international
expansion in the Middle East and, in particular, Saudi Arabia.
Neil Fletcher, Chief Executive Officer of Rival , commented:
"This transaction marks a milestone in our mission to build a
market leadership position and provide a complete offering in
downhole tools, in our view increasing the value of our company by
over $25 million. The addition of Hunting's drilling tool business
will enable us to not only serve the U.S. but also accelerate
market reach and product development, leaving us ideally placed for
a series of international launches in 2021 starting with the Middle
East. We are securing significant annual cost synergies, coupling
top tier engineering with manufacturing capabilities, and expanding
our product offerings to be well positioned in the U.S. and to
launch overseas. This is a big moment for Rival."
Commenting on the transaction, Jim Johnson, Chief Executive of
Hunting, said:
"The combination of Hunting's Drilling Tools assets with Rival
creates a business with a larger operating footprint, with leading
technology and products. The synergies identified will enable a
compelling platform to operate within the competitive U.S. onshore
market, while extending the customer partnerships of the combined
business. The transaction also provides ongoing exposure to the
drilling tools market, while allowing Hunting to refocus our
capital allocation to other business opportunities."
HESDT manufactures, owns and leases downhole tools for oil and
gas operations, with facilities in Conroe and Odessa, Texas,
Casper, Wyoming, and Latrobe, Pennsylvania. Rival provides downhole
drilling technologies from its Midland, Texas, and Houston
locations, with third-party engineering services and a company
headquarters based in Houston. In addition to the Middle East,
other target markets for Rival's international expansion - with
unconventional assets perfectly suited to Rival's technologies -
include Argentina and China.
Rival's leadership team will remain in their existing roles and
HESDT's General Manager will join the expanded business. Rival
looks forward to welcoming the majority of HESDT's employees.
Rival's Board of Managers will be expanded with Hunting appointing
a Board Manager to oversee its rights and obligations as a minority
equity holder.
About the transaction:
The business and operating assets have been contributed by HESDT
to Rival in exchange for a 23.5% equity interest. This agreed
interest is based on (i) Hunting's current customer base and long
term business relationships which extend over a decade; (ii)
HESDT's operating presence in North America, specifically within
the onshore basins in Pennsylvania, Texas and Wyoming; and (iii)
technology leadership including its rental mud motor fleet which
totals 362 units. In the year ended 31 December 2019, HESDT
reported revenue of $22 million, an underlying operating loss of $1
million and, after impairment charges, an IFRS reported operating
loss of $20 million. HESDT and Rival have given mutual
representations, warranties and indemnities to each other which are
customary for a transaction of this size and nature. Rival has
agreed to assume all post-closing liabilities associated with the
assets that have been contributed to it, and HESDT has agreed to
retain all pre-closing liabilities associated with such assets.
Rival has agreed to lease from HESDT, at market rates, the facility
at Casper, Wyoming for a minimum of six months (with optional
annual renewals) and the facility at Latrobe, Pennsylvania for a
minimum of three years (with optional annual renewals). The parties
have also agreed to certain customary minority rights and
obligations in connection with HESDT's equity interest in Rival,
including but not limited to tag-along rights, co-sale rights,
pre-emptive rights, drag obligations, transfer restrictions, and
limited approval rights. In addition, HESDT has a right to appoint
a manager to serve on the board of managers of Rival, subject to
HESDT maintaining more than 10% of the voting units of Rival. As at
31 October 2020, the carrying value of the transferred gross
assets, which predominantly incorporate the value of HESDT's mud
motors, were valued at $18.6 million.
For further information, please contact:
Hunting PLC Tel: +44 (0) 20 7321 0123
Jim Johnson, Chief Executive
Bruce Ferguson, Finance Director
Tarryn Riley, Investor Relations
Buchanan Tel: +44 (0) 20 7466 5000
Ben Romney
Chris Judd
Rival Downhole Tools Tel: +1 713 983-8377
Bryan Granier, CFO
Notes to Editors:
About Hunting PLC
Hunting PLC is an international energy services provider to the
world's leading upstream oil and gas companies. Established in
1874, it is a premium listed public company traded on the London
Stock Exchange. The company maintains a corporate office in Houston
and is headquartered in London. In addition to the United Kingdom,
the company has operations in Canada, China, Indonesia, Mexico,
Netherlands, Norway, Saudi Arabia, Singapore, United Arab Emirates
and the United States of America.
The Group reports in US dollars across five operating segments:
Hunting Titan; US; Canada; Europe, Middle East and Africa ("EMEA")
and Asia Pacific.
Hunting PLC's Legal Entity Identifier is
2138008S5FL78ITZRN66.
About Rival Downhole Tools LC
Rival, an EV Private Equity portfolio company, was originally
founded as Ashmin in 2002. The company provides engineering
services and several patented downhole drilling technologies to the
oil and gas market. Headquartered in Houston, Rival has built a
market leadership position in the downhole drilling motor and tools
market.
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END
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