Canada's Trican to buy Canyon Services as shale drilling ramps up
(Reuters) - Canadian oilfield services provider Trican Well Service Ltd (TCW.TO: Quote) said on Wednesday it would buy smaller rival Canyon Services Group Inc FRC.TO in a C$637 million deal, as it seeks to strengthen pricing power amid a revival in shale drilling in North America.
A more than 50 percent fall in global crude prices since 2014 has triggered a wave of consolidation in the oilfield services industry, which has been battered by a sharp drop in service prices.
Firms that supply frac crews, technological expertise and other services are now attempting to take back discounts extended during the slump, encouraged by a ramp up in shale drilling amid a crude oil recovery.
Brent LCOc1 has nearly doubled since hitting a multi-year low of $27.10 in January last year.
Both Trican and Canyon's available hydraulic fracturing capacities were fully booked and the companies had "increased visibility on strong activity through the third and fourth quarters of 2017," Trican Chief Executive Dale Dusterhoft said on Wednesday.
The combined company will have 675,000 hydraulic horsepower of available fracturing capacity and service bases across Western Canada.
The deal is valued at C$637 million ($476 million), and includes about C$40 million in debt.
Canyon shareholders will receive 1.7 shares of Trican for each share they own. That translates to an offer price of C$6.63 per Canyon share, representing a 32 percent premium to the stock's Tuesday close.
Trican shareholders are expected to own about 56 percent of the combined company, once the deal closes later this year, while Canyon shareholders will own the rest. Continued...