Houston-based Oil States International has sold its tube and casing business for $600 million, the company said Friday.
Steel tubes and casing are used in oil and gas wells and have been in demand amid growing drilling activity in the United States. Casing is used to form a structural wall in wells and steel tubing is used to move oil out of wells.
Marubeni-Itochu Tubulars America, which is a division of Japan’s Marubeni-Itochu Steel, bought the business from Oil States International. Marubeni-Itochu Tubulars has been a supplier to Oil States International’s Sooner subsidiary, which it will now purchase for $600 million in cash.
Sooner focused on distributing tubing and casing for wells. It was one of Oil State International’s most cyclical businesses, vulnerable to fluctuations in demand because of oil prices and drilling activity, according to company filings with the U.S. Securities and Exchange Commission.
Oil States International also had said its Sooner business had profit margins that were generally lower than other business segments because it did not manufacture its tubular goods, but was simply a distributor, according to SEC filings.
“We are pleased to complete this transaction, which allows us to invest further in our accommodations, well site services and offshore products segments while at the same time accelerating the return of capital to shareholders,” said Cindy B. Taylor, president and CEO of Oil States International, in a statement. “This transaction represents another step forward in executing our strategy to drive enhanced shareholder value.”