Houston-based National Oilwell Varco said it will buy the well completion tools business of Canada’s Trican Well Service Ltd. for nearly $41 million.
While not one of the biggest financial moves, the purchase positions NOV to expand more into the onshore shale markets. NOV is an oil field services and rig manufacturing giant that often has invested more in offshore markets.
That’s why Houston-based Tudor, Pickering, Holt & Co. investment banking firm called it a “wonderfully strategic deal” that opens up more long-term opportunity for NOV courtesy of its existing manufacturing and supply chain muscle.
The Trican business being sold designs and sells tools and equipment to complete complicated oil and gas wells in North America and certain international markets, such as Norway and Russia.
NOV Chairman, President and CEO Clay Williams was quick to tout the deal.
“The technologies acquired along with the talented team, which will continue to develop additional downhole completion solutions as part of the NOV family, make this transaction consistent with our strategy of investing in solutions which assist our customers in lowering their cost of supply,” he said in a prepared statement.
As the energy sector struggles during the ongoing oil bust, consolidations and mergers have begun within the oilfield services industry, and NOV has long been seen as a likely buyer. However, NOV, which is one of Houston’s largest energy employers, isn’t immune either. The company has shed more than 10,000 jobs and closed dozens of factories. This week, NOV said it will cut 54 more jobs in July at its Galena Park facility.
Likewise, Calgary-based Trican has turned into a seller in recent months. Tudor Pickering also noted that Trican is facing debt problems and that the deal could keep the Canadian company afloat.
“The transaction with NOV will strengthen Trican’s balance sheet and will allow Trican to focus on its core remaining businesses,” Trican President and CEO Dale Dusterhoft said in the announcement. “We believe NOV, with its leading global platform, will be able to provide continued technical leadership and customer support for the completion tools business.”
The deal, which involves about $23 million in cash and almost $18 million in NOV shares, is expected to close at the end of June.
In January, Trican sold its U.S. pressure pumping business to the Houston-based Keane Group for nearly $250 million.