Oilfield services company Nine Energy Service Inc. said Oct. 15 that it entered into a definitive agreement to acquire downhole technology provider Magnum Oil Tools International Ltd. for a total upfront cost of $493 million. This consists of a combination of approximately $334 million of cash, as well as 5 million shares of Nine Energy's common stock valued at $159 million.
The terms of the agreement also include the potential for additional future contingent payments.
The deal is expected to position the Houston-based Nine Energy as one of the leading providers of completion focused technology. The company offers completion and production solutions throughout North America, with operating facilities in the Permian, Eagle Ford, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and across Canada.
"The combination of Nine and Magnum made sense as we looked for the right partner with alignment in our culture and priorities," CEO and founder of Magnum Lynn Frazier said.
Magnum does not have any debt. Nine Energy intends to fund the acquisition with cash, borrowings under a new credit facility and the net proceeds of a notes offering announced Oct. 15. Subject to market conditions, Nine Energy intends to offer $400 million of senior unsecured notes due 2023 in a private placement.