ProFrac Holding Corp. agreed to acquire Houston-based U.S. Well Services Inc. in a stock-for-stock transaction worth an estimated $270 million.
U.S. Well Services in 2014 became the first to use electric hydraulic fracturing fleets, a technology that has become increasingly popular as more oil and gas companies look for ways to lower their carbon footprints. The combination with ProFrac—the pressure pumping firm of oil billionaires Dan and Farris Wilks— positions the company to further capitalize on the growing trend, according to Kyle O’Neill, U.S. Well Services’ president and CEO.
The transaction also follows the purchase of a stake in U.S. Well Services last year by ProFrac, which made its market debut in May.
“This combination provides value for U.S. Well Services shareholders, employees and customers, and we look forward to working with the ProFrac team to realize our shared vision for the business,” O’Neill commented in a joint release on June 21.
The combined company is expected to be the largest provider of electric frac services with 12 electric fleets, creating a market leader in NextGen frac solutions.
“The acquisition of U.S. Well Services solidifies ProFrac’s position as an industry leader in electric hydraulic fracturing, which we believe represents the future of the industry,” commented Matt Wilks, who serves as ProFrac’s executive chairman.
The U.S. Well Services combination is expected to expand ProFrac’s fleet to 44 active fleets by year end, including 12 electric fleets, 13 Tier IV dual fuel fleets and 3 Tier IV diesel fleets. The company will also acquire U.S. Well Services’ industry leading intellectual property portfolio that gave rise to electric frac technology with the market's first e-fleet deployment in 2014, which includes over 110 patents.
“In today’s environment, we believe electric frac fleets provide improved efficiency, lower R&M costs, greater value, and a lower overall cost of completion to our customer,” Wilks said. “It is a true win-win scenario for us, our customers, the environment and the communities in which we operate.”
“By leveraging our scale and capabilities along with U.S. Well Services’ Clean Fleet® technology, we intend to make ProFrac THE electric fleet provider in the U.S.,” ProFrac CEO Ladd Wilks added.
As part of the agreement, ProFrac said it will acquire U.S. Well Services in a stock-for-stock transaction with an exchange ratio of 0.0561 shares of ProFrac Class A common stock for each share of USWS Class A common stock. The acquisition is expected to be completed in the fourth quarter.
Following close, the combined company is expected to maintain a conservative balance sheet. ProFrac also expects the combination to result in approximately $35 million of annual cost synergies and eliminate the company’s expected license fees to U.S. Well Services of roughly $22.5 million per year over the next four years.
Piper Sandler & Co. is exclusive financial adviser and Paul Hastings LLP is exclusive legal adviser to the special committee of U.S. Well Services’ board of directors. Porter Hedges LLP is legal adviser to U.S. Well Services.
Jefferies LLC is exclusive financial adviser and Kirkland & Ellis LLP is exclusive legal adviser to the special committee of ProFrac’s board of directors. Brown Rudnick LLP and Lowenstein Sandler LLP are serving as legal adviser and merger clearance counsel, respectively, to ProFrac.