Archer Buys Great White Energy from Wexford

Archer Limited has paid $742 million to buy Great White Energy Services, a company formed by Wexford Capital. The deal is expected to close in the third quarter. Archer is backed by Seadrill Limited and Lime Rock Partners. Great White provides a range of energy-focused services including coil tubing and snubbing services, directional drilling, and pressure pumping.


Archer Limited (OSE: ARCHER), through a wholly-owned subsidiary, has signed a definitive Purchase and Sale Agreement for the acquisition of all the operating companies of Great White Energy Services a company formed by Wexford Capital LP, in a transaction valued at USD 742 million on a cash and debt free basis. The transaction is expected to close in the third quarter upon expiration of the Hart-Scott-Rodino waiting period or its earlier termination.

Archer’s financing for the transaction is fully guaranteed by its two largest shareholders, Seadrill Limited and Lime Rock Partners. Archer will complete a private placement for approximately 30 million shares prior to closing the Great White acquisition. The issue price will be a minimum NOK 35 per share and the issue will be fully underwritten by Seadrill and Lime Rock.

Archer has also received indicative proposals from its existing bank syndicate for long-term debt financing of up to USD 400 million and short term bridge facilities. These facilities are expected, together with existing facilities and working capital, to fully finance the acquisition. Archer’s Board will continue to monitor the Company’s capital structure to optimize return on equity. Important parameters to be considered include cash flow, future growth, capital expenditure requirements, share price level, and debt to equity levels.

Great White provides industry-leading pressure control including coil tubing and snubbing services, directional drilling, and pressure pumping including fracing and nitrogen services. Its operations are primarily focused on the U.S. onshore unconventional resource plays with locations in many of the prolific basins with strong drilling activity, primarily with an oil and liquids focus. Great White’s services are targeted at drilling and completing the horizontal wells that are critical in increasing the ultimate recovery in unconventional basins. Great White operates 13 service centers strategically located around the unconventional plays in Michigan, Oklahoma, Texas, West Virginia, Colorado, Arkansas and Wyoming and are highly complementary to Archer’s existing locations with minimal overlap and integration risk. Archer’s new pressure pumping division and its expanded pressure control divisions will be headquartered in Oklahoma City.

We believe that this transaction will benefit from strong macro trends in the oil and gas industry including a continued rise in horizontal well drilling, higher service intensity with a continued growth in demand for fracturing services combined with increased onshore focus from major integrated oil and natural gas companies in particular in unconventional resource plays both in the US and internationally. We also believe that the combination of Archer and Great White is highly complementary and will provide a complete service offering in the fast growing unconventional oil and gas market servicing all major unconventional resources in the United States. It will also give Archer the ability to bring these services to existing Archer strongholds overseas and to international plays with similar reservoir characteristics.

Archer’s Chairman Saad Bargach said:

“We are very pleased to welcome Great White’s employees and management to Archer. Great White has a highly complementary services offering with very little geographical overlap to Archer. Its completion and production services for shale oil and gas and are well recognized by its customers for first class services and completes Archer’s ambition to have a full well service offering in the USA. This combination is attractive for our shareholders and the customers of the new combined company.”

Archer’s President and CEO, Jorgen P. Rasmussen, said:

“Great White has an experienced management and operational team with an extensive track record in oilfield services and is a welcome addition to our US operations. The addition of Great White is in line with our desire to better serve our customers who will now benefit from our stronger position in Directional Drilling and Pressure Control, and the addition of Pressure Pumping Services. For Archer, this is another important step in our continued quest to create a global leader in Drilling and Well Services that is focused on assisting our customers produce more hydrocarbons through their wells. We plan to take these services into the international areas in the coming years.”

Great White’s assets include over 40 quintuplex high pressure fracturing units capable of delivering over 100,000 hydraulic horsepower, 11 coiled tubing units, 23 snubbing units, 16 nitrogen pumping units, 13 fluid pumping units, 6 wireline units, 49 MWD kits, 4 EM kits and 392 motors. All three divisions are currently undergoing capital expansion plans which will lead to an increased fleet of equipment at year end 2011. Great White has made significant recent capital expenditures to increase the size of its asset base and provide its customers with new and efficient equipment. As a result of this transaction, Archer will double the size of its existing Coiled Tubing and Directional Drilling business and add a hydraulic pressure pumping division that has 100,000 HHP currently and will have 140 000 HHP by first quarter 2012.

Great White’s first quarter revenue for the period ended March 31 2011, was $80.4 million and second quarter revenue is expected to be between $100 million to $103 million. Great White’s operating income before taxes for the first quarter 2011 was $ 19.3 million and the second quarter operating income before taxes is expected to be between $20 and $22 million. The adjusted EBITDA for the first quarter totaled $25.9 million. Second quarter EBITDA is estimated to be $29.0 million.

The expected quarterly run rates for revenue in the second half of 2011 are between $110 and $120 million as additional equipment is delivered and contributes to revenues. The estimated quarterly run rates for operating income before taxes in the second half of 2011 are between $23 and $26 million. Second half 2011 EBITDA quarterly run rates are $32 going to $38 million and will increase further as the equipment to the last fracturing crew arrives in Q1 2012.

About Wexford Capital LP

Wexford Capital is an SEC registered investment advisor with over $7 billion of assets under management. Formed in 1994, Wexford manages a series of private equity and hedge funds. Wexford prides itself on its independent thinking and opportunistic investment style and has particular expertise in the energy / natural resources sector with investments in coal, oil and gas exploration and production assets, energy services, and related sectors. Additional information regarding Wexford is available on its web site –

About Archer Limited

Archer is the well company, a global oilfield service company specializing in drilling services and well services. We employ over 7,500 people unified by a single purpose: building better wells to help our customers produce more oil and gas.

Underpinned by experience and an outstanding record for safety and efficiency, Archer drilling teams secure the production on more than 35 platforms and operate over 70 mobile land rigs in the Americas and the North Sea. Our comprehensive drilling and workover services include platform drilling, land drilling, directional drilling, modular rigs, fluids, drill bits, engineering and equipment rentals, as well as a select range of well delivery support services and products. Once each well is delivered, Archer well services specialists leverage experience and the right tools to improve well integrity and performance, extending the productive life of these vital assets. Our well services capabilities include well intervention using wireline, tractors and coiled tubing, production monitoring, well imaging and integrity management tools, and other services aimed at improving well performance and extending well life.