Basic Energy Services Agrees to Acquire Sledge Drilling Holding Corp.
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MIDLAND, Texas, March 15: Basic Energy Services, Inc. (NYSE:BAS) ("Basic") announced today it has signed a definitive agreement to acquire all of the outstanding capital stock of Sledge Drilling Holding Corp. ("Sledge") for total consideration of approximately $51 million, including $10 million in shares of Basic common stock and repayment of Sledge's outstanding debt, plus certain working capital adjustments at closing. The transaction is expected to close in the second quarter subject to completion of due diligence by Basic and other customary closing conditions.
Sledge, based in Midland, Texas, operates six medium-depth drilling rigs in the Permian Basin of west Texas and eastern New Mexico. Sledge's current annualized revenue and EBITDA are approximately $38 million and $21 million, respectively. Basic expects the acquisition will be accretive to 2007 earnings per share.
Ken Huseman, President and CEO of Basic stated, "We believe oil and gas exploration and production companies will require continued relatively high levels of drilling to meet strong demand for oil and gas, offset depletion and fully develop reservoirs. Adding a contract drilling component to the range of services we provide allows us to participate in the growing drilling market and leverages our existing corporate overhead and infrastructure over a larger revenue stream.
"We currently operate four shallow drilling rigs as part of our Southern Rocky Mountain Region but were looking for a platform on which to build a larger contract drilling business. The Sledge organization provides that platform. We are particularly pleased to add Spencer Armour and David Sledge to the senior management team of the company. Both men are well-regarded industry veterans with the experience and capability to lead our efforts in building the business not only in the Permian Basin but also in other markets within our footprint."
Basic provides well site services essential to maintaining production from the oil and gas wells within its operating area. The company employs more than 4,100 employees in more than 100 service points throughout the major oil and gas producing regions in Texas, Louisiana, Oklahoma, New Mexico, Arkansas, Kansas and the Rocky Mountain States.
FCMN Contact: ksdennard@drg-e.com
Source: Basic Energy Services, Inc.
CONTACT: Alan Krenek, Chief Financial Officer Basic Energy Services, Inc., +1-432-620-5510, or Jack Lascar or Sheila Stuewe, both of DRG&E,
+1-713-529-6600, for Basic Energy Services, Inc.
