CALGARY, ALBERTA–(Marketwired – June 4, 2013) – Secure Energy Services Inc. (“Secure” or the “Corporation”) (TSX:SES) and its wholly owned subsidiary Marquis Alliance Energy Group Inc. (“Marquis Alliance”), are pleased to announce that they have entered into an agreement to acquire all of the issued and outstanding shares of Target Rentals Ltd. (“Target”) for an aggregate purchase price, including assumed debt, of approximately $40.0 million, subject to certain customary closing adjustments (the “Acquisition”). The purchase price is being paid with $20.0 million in cash and the issuance of approximately 1,350,000 common shares of Secure. Closing is expected to occur on or about July 2, 2013, subject to certain closing conditions.
Summary of the Acquisition
Target is a privately owned oilfield service company offering a line of rental equipment and support services for both the drilling and completions sectors. Target is headquartered in Grande Prairie, Alberta and serves the Western Canadian Sedimentary Basin (“WCSB”). Their core service offering is the supply of a horizontal dual containment fluid storage tank system, used primarily for oil based drilling fluid applications. Target’s fluid storage tank system has numerous cost saving, safety, and operational advantages over a traditional 400-barrel tank setup. Target’s current fleet of 340 tanks is the largest of its kind in the WCSB. Target holds a Canadian patent on its dual containment storage tank system. Target’s leadership team has 45 years of combined experience in the oilfield rental equipment sector and is led by Paul Janzen and Steve Butt. The purchase price reflects a multiple of 4.4 times Target’s trailing 12 months normalized EBITDA.
The management team of Target will continue to operate the day-to-day business as a wholly owned subsidiary of Marquis Alliance. All Target shareholders will enter into non-competition agreements. In addition, the common shares of Secure issued as consideration will be held in escrow for five years with 20% to be released on each anniversary of the closing date.
The addition of Target’s market leading dual containment fluid storage tank system strengthens Secure’s integrated service offering, supporting and expanding the existing drilling fluids and rental business of the Corporation’s drilling services (“DS”) division. The “Target Tank” system provides customers with a safe, environmentally responsible, cost effective solution to storing oil based drilling fluids and other sensitive fluids at the rig site.
George Wadsworth, Executive Vice President, Drilling Services Division, stated that “the ‘Target Tank’ system complements Marquis Alliance’s drilling fluids products and services. This acquisition allows us to provide a more complete service offering to customers at the back end of the drilling rig when it comes to the supply and handling of oil based drilling fluids. We are delighted to welcome to Secure an experienced and innovative team that has designed, built and commercialized cutting edge oilfield technologies. This is yet another example of Secure leveraging our expertise throughout our value chain.”
About Secure Energy Services Inc.
Secure is a TSX publicly traded energy services company that focuses on providing specialized services to upstream oil and natural gas companies.
The Corporation operates three divisions:
Processing, Recovery and Disposal Division: Operating under the trade name Secure Energy Services, the processing, recovery and disposal services division focuses on clean oil terminalling, custom treating of crude oil, crude oil marketing, produced and waste water disposal, oilfield waste processing, landfill disposal and oil purchase/resale service.
Drilling Services Division: Operating under the name Marquis Alliance Energy Group Inc., and its wholly owned subsidiaries and operating under the trade name XL Fluids Systems Inc. (“XL Fluids”) and under the trade name Imperial Drilling Fluids Engineering Inc. (“IDF”), the drilling services division focuses on drilling fluid systems, solids control, equipment rental service, drilling waste management and environmental services. The drilling fluids service line includes the design and implementation of drilling fluid systems for producers drilling for oil, bitumen and natural gas.
On Site Division: Operating under the name Frontline Integrated Services Ltd., the on site division offers fully integrated services supporting the energy, resource, pipeline and civil construction industries in Western Canada. The division offers a full spectrum of services that include the full life cycle of pipeline and facility operations, waste management, asset management and recovery as well as civil, remediation and reclamation earthworks.
Non GAAP Measures
This press release contains references to normalized EBITDA. This financial measure is not a measure that has any standardized meaning prescribed by Generally Accepted Accounting Principles (“GAAP”) in Canada and is therefore referred to as non-GAAP measure. The non-GAAP measure used by the Corporation may not be comparable to a similar measure used by other companies. Management believes that in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the financial results generated by the principal business activities of the relevant company prior to consideration of how those activities are financed or how the results are taxed. Normalized EBITDA as it is used in relation to Target is defined as of earnings before interest expense, income taxes, depreciation, amortization, management fees and adjustments that are considered both non-recurring and market based in nature.
Forward Looking Statements
Statements expressed in, or implied by this press release contain forward-looking statements, including statements regarding the anticipated synergies arising from completion of the Acquisition. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous unknown risks, uncertainties, and other factors, many of which are beyond the control of Secure. These risks include, but are not limited to the risks identified in Secure’s Annual Information Form for the year ended December 31, 2012 under the heading “Risk Factors” and in Secure’s Management Discussion and Analysis for the three months ended March 31, 2013 under the heading “Business Risks” and also includes the risks associated with the possible failure to realize the anticipated synergies in integrating the operations of Target with the operations of Secure; the risks associated with the oil and gas industry; commodity prices and exchange rate changes, regulatory changes, changes in drilling activity and general global economic, political and business conditions. Industry related risks could include, but are not limited to: operational risks, delays or changes in plans, health and safety risks and the uncertainty of estimates and projections of costs and expenses and access to capital. The risks outlined above should not be construed as exhaustive. The reader is cautioned not to place undue reliance on this forward-looking information. These forward-looking statements are made as of the date of this press release and Secure disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities law.
The Toronto Stock Exchange has not reviewed, nor does it accept responsibility for the adequacy or accuracy of this release.
Chairman, President and Chief Executive Officer
(403) 984-6101 (FAX)
Secure Energy Services Inc.
Chief Financial Officer
(403) 984-6101 (FAX)