ENERGY service group Hunting said yesterday it would buy a US well specialist for £475million and that more acquisitions were on the cards.
Hunting, which has a significant presence in the north-east, is to acquire Titan Group, a market leader in North American horizontal drilling technology used in booming shale oil plays.
Hunting said the move was expected to increase earnings by 30%. It would also bring international expansion in unconventional-well operations for both Hunting and Titan, including growth in the emerging Chinese shale-gas market.
Announcing the deal, Hunting also said it was in advanced negotiations to buy a further £90million worth of businesses in the near future. Chief executive Dennis Proctor said: “Titan is an excellent business and a market leader in perforating products in North America, a market which has opportunities and in which we have been eager to grow.
“I believe Hunting can provide significant additional opportunities for the business through its geographic profile and financial operational strength in the medium and long term.”
Titan, which turned over nearly £70million in the six months to the end of June, has seen growth in onshore horizontal drilling, especially in the US, through its perforating products used in the shale oil and gas production market.
Hunting said horizontal drilling in the US had grown at an average annual rate of about 40% between 2002 and 2010. US land drilling and completion spending is projected to grow 60% between 2010 and in 2016 to £107.7billion in the latter year.
The firm, which has its headquarters in London, said that in addition to growing its exposure to high-growth unconventional-assets, the acquisition would allow it to export Titan’s services and products internationally.
Titan chief executive Ken Babcock said: “The combination of Titan and Hunting is a great fit.
“Hunting’s international distribution presence will enable Titan to grow much faster internationally and, in addition, Titan will be able to leverage Hunting’s global manufacturing footprint.”
Titan, based in Texas, has been owned by private-equity firm Riverstone Holdings – led by former BP chief executive Lord Browne – since 2007. Hunting said the deal, subject to shareholder approval, would be financed through existing cash balances, a share placing and a new £375million bank loan.
Hunting also said trading was in line with expectations and that revenue for the six months to the end of June were expected to be about £250million.
It is due to complete a £20million 18-month investment programme at its Hunting Energy Services site at Badentoy, Portlethen, to consolidate and expand capability at its Scottish operations.
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