NexTier Scoops Up Rival Alamo Pressure Pumping
The combined company will have a strengthened position in the Permian Basin, and plans to operate 17 hydraulic fracturing fleets in the region.
NexTier Oilfield Solutions is emerging into a role as consolidator in the fragmented US pressure pumping market by acquiring Alamo Pressure Pumping in a cash-and-stock transaction worth $268 million. The deal, which is expected to be completed by 31 August, brings together two leading providers of low-carbon well completion solutions in the Permian Basin. NexTier itself was born from the merger of C&J Energy Services and Keane Group in late 2019.
The Alamo fleet comprises nine, primarily CAT Tier IV, young hydraulic fracturing units. The acquired assets comprise 460,000 horsepower, around 92% of which is Tier IV DGB (dynamic gas blending) capable. Alamo operates exclusively in the Permian Basin and primarily out of Midland, Texas.
"The acquisition of Alamo accelerates and magnifies the impact of our next-generation technology strategy, providing NexTier with significant opportunities for deploying gas-powered equipment and complementary integrated solutions into a market with high and increasing demand,” said Robert Drummond, president and chief executive of NexTier. “Combined, we will operate the third-largest base of active hydraulic horsepower across the US and the largest base of next-generation equipment in the Permian, improving our scale with highly utilized fleets for an efficient customer base. Joe McKie, the Alamo president and CEO, will continue to lead the Alamo division of NexTier and report directly to me.”
Under terms of the deal, NexTier will pay $100 million in cash and issue 26 million shares of NexTier's common stock. The deal also covers the assumption of certain existing Alamo liabilities, including $38 million of equipment obligations, and $30 million of post-closing services to be provided to Alamo E&P. NexTier expects to capture a minimum of $10 million annualized cost synergies within 6 months of closing
The transaction valuation of $268 million reflects approximately $582 per horsepower for 460,000 horsepower of primarily next-gen equipment.
The combined company will own 46 hydraulic fracturing fleets totaling approximately 2.5 million horsepower, with the largest deployed fleet capable of being fueled by low-emission natural gas in the current market, according to NexTier. Alamo’s focus on the Midland Basin complements NexTier’s position in the Delaware Basin, providing intrabasin diversification and establishing NexTier as a leading completions provider in one of the world’s most prolific basins. On a combined basis, NexTier expects to operate 17 hydraulic fracturing fleets in the Permian Basin post-closing.