2nd UPDATE: Nabors To Buy Superior Well Services In $735 Million Deal
09 Août 2010 - 10:39PM
Dow Jones News
Nabors Industries Ltd. (NBR) has agreed to pay $735 million for
the stock of Superior Well Services Inc. (SWSI), expanding the
drilling contractor's offerings in shale natural gas fields.
The deal adds pressure pumping--a key service used in exploiting
these deeply buried shale-rock formations--to the Hamilton,
Bermuda, company's business, increasing the world's biggest
onshore-drilling company's exposure to a rapidly growing part of
the energy industry.
Gas production from shale deposits is both drilling- and
service-intensive, and a wide expansion in shale-gas production
over the past few years has been a boon to drilling contractors and
service providers. The shale-gas wells boast huge initial
production and then decline quickly, requiring producers to drill
additional wells. To release the gas, drillers bore down
horizontally through the formation and then pump a mixture of
water, sand and chemicals into the well under high pressure to
break the rock apart.
"They are enhancing the way they can take advantage" of shale
drilling, said Phil Weiss, an analyst with Argus Research, adding,
"It's certainly nothing that their peers do."
The deal is expected to close by the end of the quarter. The
companies valued the deal at about $900 million, which includes the
assumption of existing debt and preferred equity.
Nabors is offering $22.12 a share, a 21% premium to Superior's
Friday closing price. Superior Well's stock was up 28% this year as
of Friday and has nearly tripled the past year. Shares were last at
Nabors' bid level nearly two years ago, as oil prices were
plummeting from their record high. Shares of Superior Well Services
closed up 21% at $22.08. Nabors' shares closed up 1.9% to $18.
Nabors Chairman and Chief Executive Gene Isenberg said the
company expects the acquisition to add to earnings next year and
result in significant cost savings in North America as it
integrates Superior's pumping services with Nabors' drilling and
other offerings. Superior's U.S. presence complements Nabors' U.S.
business and will aid its expansion into areas such as the
Marcellus shale region, Nabors said.
Separately, Superior said it reversed a prior-year
second-quarter loss absent write-downs as revenue soared.
The Indiana, Pa., company posted a profit of $6.1 million, or 18
cents a share, compared with a loss of $37.9 million, or $1.66 a
share, which included $33.2 million in write-downs. Revenue soared
95% to $176 million.
Analysts polled by Thomson Reuters most recently forecast
earnings of 3 cents on revenue of $156 million.
Nabors two weeks ago said it swung to a bigger second-quarter
profit than analysts expected following prior-year charges as
revenue rose on strength in its U.S. operations.
-By Jason Womack and Tess Stynes, Dow Jones Newswires;
713-547-9201; jason.woamck@dowjones.com
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