Compressco Partners Pays $825M for Compressor Systems

HOUSTON (The Deal) -- Compressco Partners (GSJK), which is publicly traded but majority owned by Tetra Technologies (TTI), announced Sunday, July 20, that it agreed to acquire Compressor Systems from family-owned Warren Equipment for $825 million in cash, making it the fourth largest compression services provider after Exterran Holdings (EXH).

Oklahoma City-based Compressco said it expects the acquisition to boost its horsepower offerings to 1.045 million from 187,000 and allow it to offer an expanded range of compression services to customers and participate in the market more broadly.

On a conference call with analysts and investors Monday, Compressco management said they had been looking for an acquisition for a while when Compressor Systems came on the market and that the deal works out to 9 times Ebitda and doesn't come with any debt. They said the majority of the target's sales are from rentals, which will have to become master limited partnership compliant but are steady and from a young fleet.

Analysts at Simmons & Co. International said the deal aligns with Compressco management's strategy to expand its cash flow to boost cash distributions to Tetra via its 100% ownership in the general partner.

Founded in 1971, the Midland, Texas-based target, known as CSI, is the largest privately held, full service natural gas compression provider in the U.S. with Ebitda of $82.3 million on sales of $311 million for the 12 months ended March 31.

It makes, sells and maintains natural gas compressors and provides compression services that cover the natural gas production and transportation cycle to a broad customer base. It also owns one of the largest fleets of natural gas compression equipment in the U.S. with 275 units in the 1,000 horsepower and larger range and fabricates and sells engine-driven oilfield fluid pump systems primarily for the international market.

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