MIDLAND, Texas, March 15 /PRNewswire-FirstCall/ -- 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.
Safe Harbor Statement
This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Basic has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, including (i) Basic's ability to successfully execute, manage and integrate acquisitions, (ii) changes in demand for services, including contract drilling services, and any related material impact on our pricing and utilizations rates and (iii) changes in our expenses, including labor or fuel costs. While Basic makes these statements and projections in good faith, neither Basic nor its management can guarantee that the transactions will be consummated or that anticipated future results will be achieved, including the Sledge acquisition being accretive to 2007 earnings per share. Basic assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by Basic, whether as a result of new information, future events, or otherwise.
Contacts: Alan Krenek, Chief Financial Officer
Basic Energy Services, Inc.
Jack Lascar/Sheila Stuewe
DRG&E / 713-529-6600
SOURCE Basic Energy Services, Inc.