Allis-Chalmers Acquires Petro Rentals, Inc.
Allis-Chalmers Energy Inc. has acquired Petro Rentals, Inc., based in Broussard, Louisiana for approximately $29.8 million in cash, which includes the payment of approximately $9.5 million of debt, and 246,761 shares of Allis-Chalmers common stock. The acquisition was funded with cash on hand remaining from its recent equity and debt securities offerings. Based on Petro Rentals' unaudited financial statements, Petro Rentals' EBITDA for the eight month period ended August 31, 2006 was approximately $4.9 million.
With division offices in Broussard, Houma and Arcadia, Louisiana and Alvin, Texas, Petro Rentals serves both onshore and offshore markets. Established in 1987, Petro Rentals provides a variety of quality rental tools and equipment and services that are vital throughout the life of a well, from drilling through plugging and abandonment, with an emphasis on production related equipment and services.
Petro Rentals offers a wide selection of wire line services and equipment, land and offshore pumping services, and coiled tubing support equipment. In October 2006, Petro Rentals acquired its third coiled tubing unit and expects to take delivery of an additional coiled tubing unit by December 31, 2006.
Micki Hidayatallah, Allis-Chalmers' Chairman and Chief Executive Officer, stated, "The acquisition of Petro Rentals helps us to realize one of our primary objectives of creating a better balance between our drilling-related and production-rental activities. We expect Petro Rentals' coiled tubing division to complement our Production Services segment, which already had two coiled tubing units before this acquisition. With the Petro Rentals acquisition and the additional coiled tubing units on order, we expect to have a total of eight coiled tubing units and 14 capillary tubing units by December 31. With a projected utilization rate of 50%, we are very optimistic about this portfolio of coiled and capillary tubing units contributing significantly to our financial performance. With current estimates of capital expenditures by the E&P companies increasing in 2007 at a rate greater than 15% we feel that Petro Rentals will sustain its EBITDA run rate and through efficient utilization of the new coiled tubing units should increase its EBITDA contribution to Allis-Chalmers Energy to over $11 million."
Allis-Chalmers Energy, Inc., is Houston based multi-faceted oilfield services company that provides services and equipment to oil and natural gas exploration and production companies, throughout the United States, including Texas, Louisiana, New Mexico, Colorado, Oklahoma, Mississippi, Utah, Wyoming, the Gulf of Mexico, and internationally primarily in Argentina and Mexico. We provide directional and horizontal drilling services, rental of specialized tools for onshore and offshore drilling, completion and workover operations, casing and production tubing installation, compressed air drilling services, and workover services with capillary and coiled tubing units. In Argentina, we are a leading provider of drilling, completion, repair and related services.