Warburg Pincus pours $300 million into oil field services startup

(Andrew Burton/Getty Images)
(Andrew Burton/Getty Images)

A Houston-based oil field services startup has received an infusion of private equity money to acquire or team up with small-to-midsize oil field technology businesses to create new hardware and innovation that bolster exploration and production.

Rubicon Oilfield International announced Tuesday that it obtained a $300 million line-of-equity investment from New York-based private equity firm Warburg Pincus to help fund it’s effort to build a global oilfield products and equipment franchise through acquisitions, partnerships and other investments.

“We see a compelling opportunity to build an enterprise focused on upstream oilfield services through accretive transactions and organic growth initiatives,” Rubicon’s CEO Michael Reeves said in a statement.

The prolonged crude slump has strained the finances of service providers, who have been seen a waning demand for their products and services as oil companies reeling from anemic crude prices curtail spending plans, idle rigs and press services companies for deep discounts. With the injection of capital from Warburg Pincus, Rubicon has the financial backing to take advantage of some of the bargains that may get pried loose by extended financial turmoil in the services industry.

“We will leverage current market trends and consolidation to build a business that will be well-positioned for the long term,” Reeves said in a statement.

As it looks to grow its business, Rubicon has expressed a keen interest in companies that focus on proprietary downhole tools, products and technologies.

“There is a need for smart, sophisticated technology, products and services in (exploration and production), and Rubicon will address that need by integrating attractive assets to better serve customers,” David Krieger, managing director at Warburg Pincus, said in a statement.

In addition to the Rubicon deal, Warburg Pincus also announced that it financed a midstream company’s acquisition of natural gas pipelines and a processing plant serving West Texas.

Navitas Midstream Partners, based in The Woodlands, bought up 114 miles of low-and-high pressure natural gas gathering pipelines and a cryogenic processing plant from a subsidiary of Houston-based oil company Apache Corp. The deal marks the second time Navitas has purchased natural gas gathering and processing assets in that region. Terms of the transaction weren’t disclosed.

“We are excited to further expand our footprint in the core of the Midland Basin with an active, high quality producer such as Apache,” Navitas CEO and founder R. Bruce Northcutt said in a statement. “The addition of these assets signals our continued confidence in the long-term growth potential of this basin.”