Gainesville based Select Energy Services and Houston-based Rockwater Energy Solutions announced that both companies have entered into a definitive agreement for a merger.
Both companies are leading providers of water management services and chemical products for the unconventional oil and gas industry.
The deal is a stock-for-stock transaction, and Rockwater Energy shareholders will receive 37.95 million shares of the Select Energy common stock for all outstanding shares of Rockwater Energy common stock. After the merger, Select Energy shareholders will own roughly 64.4% of the combined company or 106.73 million shares, and Rockwater Energy shareholders will own nearly 35.6% of the company. The transaction is expected to close sometime in the third quarter of 2017.
The water-related services of the combined company will be consolidated and run under the Select Energy company name, and the headquarters will remain in Gainesville, TX with an office in Houston as well. The Rockwater Energy chemicals business unit will still operate under the Rockwater brand name.
Rockwater Energy’s current president and CEO, Holli Ladhani, will be the president and CEO of the new merged company. Select Energy’s current Chairman and CEO, John Schmitz, will become the full-time Executive Chairman of the new company.
“I am excited about the opportunities this merger creates for our customers, shareholders and employees. We are combining two extremely entrepreneurial companies with similar cultures and aspirations, which will enhance our competitive advantage through strong local partnerships, differentiated service offerings, and access to financing. Our service lines are highly complementary, and the expertise and capabilities from both companies will allow us to work smarter, and bring new solutions and technologies to the forefront,” commented Ms. Ladhani in a Rockwater Energy press release.
The need and demand for water services has risen greatly lately since oil and gas producers are drilling deeper and kicking out further horizontally in their wells. With the added stages that need to be fracked, the oilfield water usage has multiplied exponentially. New wells can use up to 20 million gallons of water each during completion.
John Schmitz commented on the merger via a press release, “This is a very exciting opportunity to combine two companies that are highly-focused on the challenge of providing world-class water-related services to the major shale basins. As we are experiencing a strong recovery in many of our markets, we have the opportunity to combine our equipment, management teams, and over 3,200 field personnel to provide more comprehensive services to our customers. I believe the combined expertise and scale we are creating in this merger will generate substantial benefits for Select and our shareholders.”
Rockwater Energy is a privately-held company that was formed in 2011, and Select Energy is a public company that started in 2008. The new combined company will be able to better service the growing demand for water in the west Texas Permian Basin.
Article written by HEI contributor Raymond Arrasmith.