Lufkin Industries LLC acquired the rod-lift business of Schlumberger Ltd. on Nov. 2, expanding its platform after recently becoming an independent company with backing from KPS Capital Partners LP.
Schlumberger’s rod-lift business is a large provider of rod-lift products and services for onshore producers across North America. The divestiture of the rod-lift unit follows several other asset sales made so far this year by Schlumberger as the oilfield services giant works to restructure itself into a leaner customer-aligned structure. The deal also follows the posting of the top oilfield services provider’s third straight quarterly loss on Oct. 16.
Earlier this year, Lufkin was resurrected as a freestanding company after Baker Hughes Co. sold its rod-lift solutions business, which it had inherited from the fallout of its General Electric Co. (GE) merger.
New York-based private equity firm KPS Capital Partners LP agreed in early May to acquire the Lufkin rod lift business, based in Missouri City, Texas, from Baker Hughes for an undisclosed amount. GE had purchased the Lufkin business for $3.3 billion in 2013—four years before merging its oilfield equipment and services arm with Baker Hughes.
KPS closed the acquisition of Lufkin on June 30. The newly independent Lufkin, which operates globally, is led by an independent team headed by KPS Partner Ryan Baker.
Lufkin said in a Nov. 2 company release it completed the acquisition of the North American land rod lift business of Schlumberger. The company did not disclose the terms of the transaction.
In a statement, Michael Psaros, co-founder and co-managing partner of KPS, said Baker is successfully building Lufkin through the acquisition of complementary businesses, technologies and products by leveraging KPS’ capital resources and global platform.
KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $11.5 billion of assets under management as of June 30, according to the company release.
“KPS is committed to expanding the Lufkin platform despite unprecedented volatility in the energy business, which will benefit customers of Lufkin and Schlumberger’s rod lift business,” Psaros said in the statement.
Schlumberger’s rod-lift business has an expansive footprint across all major oil-producing regions onshore in North America, including the Permian Basin where Don-Nan has operated for almost 60 years. In addition to Don-Nan, other notable brands within Schlumberger’s rod-lift business include Shores Lift Solutions, KBA Engineering, Platinum Pumpjack Services and RLC Rod Lift Consulting.
During the third quarter, Schlumberger executed on its plan to exit high-cost, low-margin businesses by combining its OneStim pressure pumping business with Liberty Oilfield Services Inc. The company also agreed to divest its low-flow artificial lift business. Schlumberger expects both transactions to close this year and be accretive to margin in 2021.
Simmons Energy, a division of Piper Sandler & Co., advised Lufkin and its affiliates on the transaction with Paul, Weiss, Rifkind, Wharton & Garrison LLP and Dentons serving as legal counsel. Schlumberger was advised by PPHB LP with Akin Gump Strauss Hauer & Feld LLP providing the company legal counsel.