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August 10, 2010
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Nabors Industries Ltd (NBR) – North America’s largest onshore oil and natural gas driller – has agreed to acquire oilfield services provider Superior Well Services Inc. (SWSI) for about $900 million.
As per the deal, Superior Well shareholders would get $22.12 in cash for each share they hold, representing a total consideration of $735.6 million. At Superior Well’s Friday’s closing stock price of $18.23, the deal values the company’s shares at a 21% premium. Additionally, Nabors will assume $165 million in debt.
Holders of about a third of Superior Well’s outstanding shares have accepted the $22.12 per share offer. Nabors expects the tender offer to close by the end of the third quarter following which the company will purchase any remaining shares of Superior Well through a second-step acquisition at the same per-share price. In case the agreement is canceled for certain reasons, Superior Well is obliged to pay a $22.5 million termination fee and as much as $5 million in expenses to Nabors. The transaction has already been cleared by both the company’s boards.
Indiana, Pennsylvania-based Superior Well Services is an independent oil service firm providing a range of wellsite solutions to energy companies, with specialization in technical pumping services and downhole surveying services.
The Superior Well transaction is part of Nabors’ long-term strategic plan and will add around 430,000 horsepower to its pressure pumping (an umbrella term used to describe a number of vital services performed on new and existing wells) gear. Apart from significantly expanding its shale (dense rock formations) drilling ability, Nabors also stands to benefit by expanding its geographic foothold, particularly in the prolific Marcellus Shale play, a key natural gas drilling area located throughout Western Pennsylvania and much of the Appalachian Basin.
Following the close of the deal, Nabors will be able to derive significant synergies by integrating its drilling and workover offerings with Superior Well’s pumping services. The deal is likely to be accretive to Nabors’ earnings from 2011 onward.
Barbados-based Nabors Industries conducts oil, gas, and geothermal land drilling operations. It is also one of the largest land well servicing companies and workover contractors in the U.S.
Nabors shares are currently rated as ‘Neutral’, implying that the stock is expected to perform in line with the broader U.S. equity market over the next six to twelve months.
Read the full analyst report on "NBR"
Read the full analyst report on "SWSI"
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