Pioneer makes $110 million acquisition

San Antonio-based Pioneer Drilling Co. said Tuesday that for about $110 million it acquired a Louisiana company that will augment the contract drilling services it offers.

Pioneer paid cash for Go-Coil LLC, which provides coiled-tubing services to oil and gas exploration and production companies.

Pioneer had been looking at entering the coiled tubing business for about two years as a service that it should offer its clients, CEO William Stacy Locke said. Pioneer provides contract land drilling services to oil and gas operators in the United States and Colombia.

“It’s a very high-margin business, and it fits so well in our production services offering,” Locke said. “We’re picking up another piece of the life cycle, from drilling the well to its production.”

John Keller, oil field service analyst at financial services firm Stephens Inc., said, “Strategically, it’s a good move. Coiled tubing is among the best service lines in the industry right now. Pricing remains very strong and it looks to be that way for the foreseeable future.”

After a well is drilled, a coiled-tubing unit assists in the completion of the well, Keller said, adding that coiled tubing also is used to go back into existing wells to help them produce more.

Pioneer paid a fair price for Go-Coil, Keller added. “I wouldn’t say they got a steal, but they didn’t over pay.” It’s a plus that Pioneer will inherit an existing fleet and expertise, because it’s difficult to find qualified personnel, he said.

Pioneer’s acquisition of Go-Coil closed on Dec. 31.

Locke said Go-Coil was attractive because of its strong management team and its new units. Go-Coil, which has operations in Louisiana, South Texas, Oklahoma and Pennsylvania, has a fleet of 10 coiled-tubing units that were placed in service from 2009 to 2011.

Acquiring Go-Coil offers Pioneer expansion opportunities, Locke said. He expects the acquisition will contribute about $26 million to $29 million of earnings before interest, taxes, depreciation and amortization (EBITDA) in 2012.

Pioneer hopes to reach 20 coil tubing units within three years. Locke plans to start by ordering at least two new units in January. “We’re going to grow it,” he said.

Go-Coil is being folded into Pioneer’s Production Services division.