M&A Activity: Louisiana energy services companies actively pursue growth through acquisitions

G.F. Gay Le Breton And Liam Norton //September 19, 2023

https://bit.ly/Chaffe-CB-Sep23

With rising oil demand and increased drilling and production activity in the Gulf of Mexico, Louisiana energy services companies are actively pursuing growth through acquisitions. Two such companies announced deals in August, reinforcing the state’s pivotal role in the energy industry.

Gordon Technologies, based in Scott, Louisiana, acquired Houston-based energy services firm Paisano Labs, LLC for an undisclosed price. Founded in 2011, Paisano designs and manufactures proprietary gamma detectors and propagation resistivity tools for demanding directional drilling operations in the oil and gas industry.

Gordon Technologies views the Paisano acquisition as further enriching its portfolio of measurement-while-drilling (MWD) technology.  Commenting on the deal, Gordon founder and CEO Terry Frith said that “Paisano represents an incredible opportunity for Gordon to vertically integrate and continue to advance our proprietary MWD and LWD electronics and sensors.” Notably, Paisano’s LWD gamma detectors and propagation resistivity tools have demonstrated exceptional performance in extensive testing, solidifying their competitive edge.

Since its founding in 2014, Gordon has attracted multiple private equity investments while pursuing its growth strategy. In 2017, Houston-based Pelican Energy Partners, LP partnered with Gordon and invested substantial capital in new technology development as well as the significant growth of its US rental fleet.  The company now has additional facilities in Texas, Oklahoma, South Dakota and North Dakota.

Gordon acquired Noralis, Inc. in 2020 to develop Remote Ops and Geo-Steering capabilities. The next year, Gordon further expanded its offerings by acquiring dynamics-while-drilling tool provider Lodestar International.

Gordon announced a partial liquidity event for its shareholders in November 2022, when Alpha Dhabi Holding, a United Arab Emirates investment holding company, purchased 25% of the company’s equity for approximately AED 600 million.  This is equivalent to approximately $164 million at the exchange rate at that time.

The strategic partnership with Alpha Dhabi opens doors for international expansion into the Middle East, strengthening Gordon’s position to be a global player in the oil and gas industry. At that time, CEO Terry Frith said, “We believe this represents a great opportunity to generate further value as we grow and provide our proprietary technology services to what is one of the core oil and gas markets globally.” Terry Frith continues to hold an interest in the company and drive its technology innovation.

N2 Solutions, known as “N2S,” is another Louisiana-based company with a vision for growth in the energy sector. Founded in Lafayette in 2016, N2S is a prominent supplier of nitrogen services catering to the energy, industrial, and utilities sectors. They operate from strategic locations in Broussard, LA, Highlands, TX, and Mercer, PA.

In August, N2S acquired PFS Nitrogen Services LLC (“PFS”), a Petal, Mississippi-based nitrogen technology company specializing in supporting the pipeline and petrochemical industry. While the financial terms of the deal remain undisclosed, this acquisition aligns with N2S’s commitment to enhancing their service offerings and geographical presence in the Gulf Coast region.

One of PFS’s innovative technologies that N2S will now harness is their renowned pipe freezing technique, which utilizes liquid nitrogen to create a secure and efficient ice plug within a pipe section. This technique allows for non-intrusive mechanical isolation and enables operators to effectively locate leaks on buried pipelines during hydrostatic testing.

Chad Hollier, Chairman of N2S’ Board of Directors, expressed excitement about the acquisition, saying, “The synergy with PFS provides an extension of our nitrogen services and an expansion of our fleet, which allows us to better support our current customers, while integrating additional capabilities and technology that will improve operational efficiencies.” Importantly, Kirk Clulee will continue to oversee PFS’ business functions after the acquisition.

Also last month, Lafayette-based PRT Offshore enter into a definitive agreement to sell to Expro Group Holdings in a deal valued at $106 million.  Expro will pay $62 million in cash and $44 million in newly issued Expro shares, with provisions for additional consideration in the case of superb financial performance from the newly-acquired PRT Offshore.

Expro stated that total consideration is expected to be approximately 4.0x 2023 and 2024 Adjusted EBITDA, excluding possible cost and revenue synergies.

This acquisition continues a series of moves by Expro to bolster its offerings of technology-enabled services and solutions in the subsea well access sector. PRT specializes in Deepwater offshore well completion and intervention.

In 2015, to support its own growth, PRT Offshore received equity and mezzanine capital investments from both New Orleans-based LongueVue Capital and Ironwood Capital, as well as company management.

The transaction is expected to close in the fourth quarter of 2023.

G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Liam Nortonis a mergers & acquisitions analyst with the firm. Investment banking services are provided by ChaffeSecurities Inc., member FINRA/SIPC. For more information, visit http://chaffe-associates.com.