Nine Energy Services to acquire Magnum Oil Tools for $493M in cash, stock
Nine Energy Service announced that it has entered into a definitive agreement to acquire Magnum Oil Tools International, LTD. Magnum has a broad offering of proprietary downhole completions products, including dissolvable and composite frac plugs, as well as a number of other patented consumables. The Magnum partnership solidifies Nine as one of the premier providers of completion focused technology combined with excellence in both service execution and conveyance capability. Magnum provides Nine with a strong, first-mover advantage in the dissolvable frac plug market due to its extensive track record of successful market penetration and positions Nine as a leading provider of differentiated isolation tools with the ability to service the entire addressable frac plug market. Magnum brings a proven ability to design, engineer and commercialize applicable and reliable downhole technologies, as well as stay ahead of industry trends. Nine expects the addition of Magnum's portfolio of completion tools to be well suited to help operators reduce risk and cycle times as completions continue to become more complex with longer laterals, more stages and mega-well pads. Total upfront transaction consideration of $493 million consists of a combination of approximately $334 million of cash, as well as 5 million shares of Nine common stock. The terms of the purchase agreement also include the potential for additional future contingent payments. Magnum does not have any debt. The Company intends to fund the cash purchase price with the net proceeds of a notes offering announced concurrently with the announcement of this acquisition, borrowings under a new credit facility and cash on hand.