NEW ORLEANS (
) -- In a move to bolster shale gas drilling capabilities, offshore oil drilling specialist
Superior Energy Services
(SPN - Get Report)
has agreed to buy
Complete Production Services
for $2.7 billion in a cash and stock purchase.
To buy Complete, Superior is offering a .945 portion of its own stock and $7.00 in cash for each Complete share, taking a 52% stake in the company. Superior will be issuing new shares to fund the deal, according to a press release announcing the deal. The math of the deal works out so that Superior is paying roughly $32.90 a share for each Complete share -- and it will be adding roughly 75 million shares, doubling its outstanding shares, according to a quick estimate given to
by Trey Stolz, a managing director of research at Iberia Capital Partners.
In early trading, Complete Production Services shares rose nearly 40% to over 28.11, while Superior Energy Services shares fell over 17% to below $23. It's a potentially dilutive and expensive deal that has pushed Complete Production Services' market cap above Superior Energy Services' when the markets opened Monday morning.
The deal values Complete Production Services at over $2.7 billion or is over a 60% premium from the stock's last close before the deal was announced and nearly 30% over its 2 month average - but below the recent high of $42.60 a share that the company reached in July.
Complete Production Services has fallen over 40% since its July all-time high, since being a public company in 2006. In the deal announcement, the company also said its third quarter earnings will be than previous guidance, and it lowered its overall 2011 projection of earnings before interest, taxes, depreciation and amortization by $5 million to $155 million.
With the purchase, Superior Energy Services is looking to add shale gas drilling abilities to its existing specialty in offshore drilling services in the Gulf of Mexico and in 16 international regions. The New Orleans- based company founded in 1989 with close to 5,000 employees and annual revenue of $1.4 billion has divisions that provide subsea oil well control products, drill piping and a services division for oil exploration companies drilling exploratory deep and shallow water oil wells.
Complete Production Services, founded in 1994 and with $1.5 billion in revenue and 5000 employees, sells pressure pumps and well services for the hydraulic fracking that's used in shale gas drilling. It has a regional focus in North American shale, including operations in the largest shale reserves like the Haynesville Shale in North Louisiana, the Marcellus Shale in Pennsylvania, the Bakken Shale in North Dakota, the Fayetteville Shale in Arkansas, the Woodford Shale in Oklahoma and the Barnett Shale region of North Texas.