Houston-based Select Energy Services Inc., on a tear this year to expand its Lower 48 oilfield services for exploration and production (E&P) companies, has agreed to pay $45 million for Nuverra Environmental Solutions Inc.
Select is paying $45 million for Nuverra, which provides produced water services for E&Ps across the Lower 48, including in the Bakken and Haynesville shales.
Select’s merger and acquisition (M&A) activity has been growing this year. The company earlier this month completed a cash-and-stock takeover of the U.S. onshore rentals and accommodations operations of HB Rentals LC, a subsidiary of Superior Energy Services Inc. In October, it closed the merger of some Basic Energy Services Inc. assets, including Agua Libre Midstream LLC.
“These acquisitions represent a continuation of our strategic effort to improve and bolster our base business, advance our technology and diversification efforts, and execute on strategic consolidation opportunities,” CEO John Schmitz said.
“The Nuverra acquisition will strengthen our geographic footprint with a unique set of water logistics and infrastructure assets, particularly in the Bakken, Haynesville and Northeast, while continuing to expand our production-related revenues. Additionally, the acquisition of HB’s onshore operations will add significant asset and regional breadth to our market-leading rentals and accommodations business unit within our Water Services segment.”
According to Schmitz, the Nuverra merger would add more than 300,000 barrels/day of permitted produced water disposal capacity in Louisiana, Montana, North Dakota, Ohio and Texas.
“When combined with our existing assets and other recent acquisitions, this brings our company-wide permitted daily disposal capacity to approximately 2.5 million barrels per day,” Schmitz said.
Are the Haynesville And Bakken Eyed For Growth?
Nuverra also owns and operates a 60-mile underground twin pipeline network in the Haynesville that collects and transports produced water for reuse.
“More than 60% of Nuverra’s disposal volumes in the Haynesville are currently delivered via the pipeline network, with the ability to handle disposal volumes of more than 100,000 barrels per day,” Schmitz said.
In addition, Nuverra’s 50-acre landfill facility in North Dakota’s Bakken could be a “unique opportunity for Select to expand its capabilities into a new service offering. With current remaining available permitted capacity of approximately 1.3 million cubic yards, we believe the facility has the potential to be expanded up to a total of 5.8 million cubic yards of available capacity with additional permitting.”
As important, Schmitz said, the Nuverra deal would help to consolidate Select’s “sizable existing infrastructure portfolios.” The recent M&A deals “provide us with a significant footprint of recurring produced water volumes and meaningful optionality for incremental gathering and recycling infrastructure development across larger networked systems.”
Select’s technology platform including FluidMatch, offers E&Ps “sustainable, full lifecycle water and chemicals solutions,” Schmitz noted. “We believe there remains significant opportunity to further commercialize and transition these legacy infrastructure assets toward new sustainable strategies revolving around our water recycling…”
The goal, he said, is to “develop sustainable water solutions with a shared commitment to conservation. Ultimately, we view this captive supply of produced water as an alternative, sustainable water source and will continue to invest in the technology and infrastructure needed to provide these solutions to our customers.”
Since the start of the fourth quarter, Select also has seen a “strong recovery in activity and financial performance…buoyed by a robust commodity price environment,” Schmitz said. In addition, there’s enthusiasm about the “opportunities that lie ahead in 2022.
“In total, upon completion of the Nuverra acquisition, we will have added an estimated nearly $300 million of incremental annualized run rate revenue through M&A since the beginning of the third quarter of 2021,” he noted.
“Consistent with our belief that consolidation in the oilfield service markets is a critical avenue to advance profitability in the industry, we also believe there are meaningful cost synergy opportunities to be gained from these acquisitions, including resolving the duplication of public company cost structures with Nuverra.”
The Nuverra transaction has been unanimously approved by each board, and is set to be completed by the end of March. Nuverra agreed to trade all outstanding shares for 4.2 million shares of Select common stock. Select also has a support agreement with Nuverra stockholders that collectively represent 85% of the outstanding voting shares to approve the transaction.