Weekly OFS Newsletter – DECEMBER 18, 2017
OILFIELD SERVICES UPDATE
Monday December 18, 2017
News items ended December 17, 2017
Mergers and Acquisitions
- Cordy Oilfield Services Inc. (TSXV:CKK) closed the acquisition of 1094956 Alberta Ltd. (Hornet Hydrovac), a hydrovac trucking services provider. The acquisition increases Cordy’s hydrovac fleet size by 33% with a transition towards higher capacity hydrovacs. This transaction is aligned with Cordy’s objectives to diversify its client base and to increase its municipal and industrial market share.
- Xylem Inc. (NYSE:XYL) announced the $509 million acquisition of Calgary based Pure Technologies Ltd. (TSX:PUR), a provider of water and wastewater diagnostics and analytics services serving the oil and gas, power and industrial sectors. The acquisition strengthens Xylem’s position as a provider of leading water solutions globally. Xylem is financing the transaction with cash and low interest, short term debt.
- Cathedral Energy Services Ltd. (TSX:CET) announced a new two year credit facility expiring December 31, 2019. The $20 million available consists of a $5 million operating facility and a $15 million extendible revolving credit facility. Cathedral elected to reduce its credit facility from the previous $23 million to reduce standby and other related fees.
- Tidewater Midstream and Infrastructure Ltd. (TSX:TWM) announced a $125 million private placement of 6.75% senior unsecured notes due Dec. 2022. The notes will be issued at discount at $994.79 per $1,000 principal amount. Tidewater intends to use the net proceeds from the private placement to repay indebtedness, fund capital projects and for general corporate purposes.
- Enerflex Ltd. (TSX:EFX) closed its USD $175 million and $45 million private placement of senior unsecured notes. The private placement was conducted on a best-efforts basis and the proceeds will be used to refinance existing corporate indebtedness.
- Cenovus Energy (TSX:CVE) announced plans to reduce its workforce by 15%. The decision is aligned with strategic objectives of reducing costs and deleveraging Cenovus’ balance sheet while maintaining capital discipline. Cenovus had approximately 3,600 employees as of July 2017.
- The price of Western Canadian Select (WCS) decreased by 14% in the past week, following a decrease of 10% two weeks ago. The weakness in pricing is due to rising supplies as new production enters the market, as well as recent restrictions on export pipelines. Due to short term pipeline constraints, there has been an increase in crude flows by rail.
- Whitecap Resources Inc. (TSX:WCP) closed its $940 million acquisition of Cenovus Energy Inc.’s (TSX:CVE) Weyburn assets. The assets have current production of approximately 14,800 boe/d. The proceeds from the sale will be used to pay down Cenovus’ debt from its $16.8 billion acquisition of ConocoPhillips’ (NYSE:COP) assets.
- Standard & Poor’s upgraded Calgary based Tervita Corp.’s credit rating from a B- to B rating. The upgrade reflects the increase in profitability of Tervita, driven by growth in waste volumes from its drilling and completion services. Tervita is an environmental solutions provider serving the energy industry, with services including asset recovery, civil and environmental construction, remediation and reclamation services and waste disposal.
- Mullen Group Ltd. (TSX:MTL) announced it is actively seeking a “transformational acquisition”, particularly in its trucking/logistics segment. Any acquisitions will be funded by a combination of cash on hand and new debt. This announcement is consistent with Mullen’s strategic objectives of diversifying away from the oil and gas sector and towards the consumer part of the economy.
- Between January and November 2017, a total of 8,867 wells were licensed across Canada, an increase of 62% from 2016’s comparable period of 5,488 permits granted. Producers in Western Canada licensed 5,728 wells for oil or bitumen drilling, an increase of 76% from last year’s amount. Year to date, Crescent Point led producers with 816 licensed wells, followed by Canadian Natural Resources (TSX:CNQ) with 619 and Cenovus Energy (TSX:CVE) with 446.