UK’s Expro Group, an energy services company, and Dutch Frank’s International, an oil services company that provides drilling and completions solutions and services, have entered into a definitive agreement to combine in an all-stock transaction.
Upon the closing of the transaction, Expro shareholders will own approximately 65 per cent of the combined entity, with Frank’s shareholders owning approximately 35 per cent.
Expro said in a statement on Thursday that the combination brings together two companies with capabilities in well construction, well flow management, subsea well access, well intervention, and production services.
The combined company will provide customers with solutions across the well lifecycle.
Expro also noted that the combined company will have a debt-free balance sheet, robust order backlog, more than $1 billion of pro forma annual revenue as well as an ability to generate through-cycle free cash flow and growth.
“This transaction unites two established industry players to create a leading service provider with an extensive portfolio of capabilities across the well lifecycle”, said Mike Jardon, Chief Executive Officer of Expro.
He added: “This business combination also allows us to rationalize facilities and other support costs, optimize business processes, capitalize on profitable growth opportunities and create value for shareholders of both companies, particularly as the environment for international projects continues to improve”.
Jardon continued, “The combination of Expro and Frank’s also allows us to advance our commitment to a lower-carbon future, which is underpinned by our goals to maximize efficiency and improve our products and services to help the company and its customers lower emissions.
“Finally, this transaction will unite two of the premier teams in the industry, and better allow us to attract, retain and develop the best workforce”.
Mike Kearney, Chairman, President and CEO of Frank’s, said: “Expro and Frank’s share complementary cultures, values and competencies – all of which support a smooth integration for our customers and employees”.
Kearney added: “The combination brings scale, improved profitability and free cash flow and, together, we will be better positioned for the industry recovery, of which we are in the early stages”.
Full-cycle services provider
The combined company’s expanded product offerings will enable it to perform well across the oilfield cycle and positioning it to capitalize on upside driven by a recovery.
It will offer a portfolio of services and solutions across well construction, completions, production optimization and decommissioning, in both onshore and offshore markets.
Together, Expro and Frank’s will generate approximately one-third of the combined company’s revenue from customers’ production optimization efforts. At 31 December 2020, Expro’s backlog was approximately $1 billion.
The combined company will remain committed to achieving a 50 per cent reduction in carbon intensity by 2030, and net zero CO2 emissions by 2050.
Furthermore, the combined company is targeting approximately $55 million of annual run-rate cost synergies to be achieved in the first twelve months, ramping up to $70 million of annual cost savings within 36 months.
Following the closing of the transaction, Expro Chief Executive Officer, Mike Jardon, will become Chief Executive Officer of the combined company and will be a member of the Board of Directors.
Mike Kearney, Frank’s Chairman, President and Chief Executive Officer, will serve as Chairman of the combined company.
Quinn Fanning will serve as Chief Financial Officer of the combined company, and the remainder of the new leadership team is expected to include representatives of both companies.
In addition to Mike Kearney and Mike Jardon, the remainder of the combined company’s nine-member Board of Directors will comprise five additional directors appointed by Expro and two additional directors appointed by Frank’s.
The combined company will be operationally headquartered in Houston, Texas, and will maintain an operating presence in Lafayette, Louisiana, Aberdeen, Scotland and other key locations around the world. The principal executive office of the combined company will remain in the Netherlands.