TESCO Expands US Presence
Tesco Corporation has purchased the assets of Tong Specialty and Cheyenne Services. Tong Specialty is based in Lafayette, Louisiana and Cheyenne Services is based in Houston, Texas. Both companies provide a broad offering of tubular running and related services offshore in the US Gulf of Mexico and onshore in Texas and Louisiana. These companies supply equipment and personnel for the installation of tubing and casing, including power tongs, pick-up/lay- down units, torque monitoring services, connection testing services and power swivels for new well construction in work-over and re-entry operations. Additionally, Cheyenne Services is a leader in the installation service of deep water smart well completion equipment using its proprietary technology.
Estimated full-year 2005 combined revenue associated with the assets being acquired from these two companies is approximately US$45 million. TESCO expects the acquisitions to be immediately accretive to earnings.
These assets will be combined with TESCO's existing tubular services operations in the US and will provide immediate expansion opportunities for TESCO's proprietary casing running service delivered with its Casing Drive System(TM) (CDS(TM)) technology. Tong Specialty's and Cheyenne Services' base locations, corresponding service delivery capacity and client portfolios will provide TESCO with significant additional market access, and generate CDS(TM) deployment opportunities, allowing mainstream accessibility to the safety and efficiency of the CDS(TM) tool.
The combined purchase price of these two all-cash acquisitions totals approximately US$50 million. In connection with these transactions, TESCO has entered into a new US$100 million credit facility with JP Morgan Chase to fund these acquisitions, finance potential future acquisitions, and provide working capital support. Parks Paton Hoepfl & Brown acted as financial advisor to TESCO in these transactions.
Julio M. Quintana, President and CEO said, "These acquisitions are a key component of our casing running strategy. As we have previously stated, TESCO is committed to revolutionizing the way casing is run. By merging Tong and Cheyenne with our successful casing running business, the combined company is uniquely positioned to excel in the tubular services business in the US market. Further, it is our intent to utilize the proceeds from previously announced divestitures to fund the majority of the cost of these acquisitions."
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