Trican deal to create fracking behemoth

Canyon to merge with oilfield firm

Oilfield services provider Trican Well Service Ltd. is buying smaller rival Canyon Services Group Inc. in an exchange of shares and debt valued at $637 million as it seeks to boost pricing power amid a revival in shale drilling in North America.

The combination of the two Calgary-based companies would be the largest hydraulic fracturing company in Canada by a wide margin and is another example of energy sector companies consolidating following a more than twoyear collapse in oil prices and decline in oilfield activity.

It follows the competing bids by Total Energy Services Inc. and Western Energy Services Corp. for driller Savanna Energy Services Corp.

Trican said it would issue new shares to buy Canyon even though both companies have oilfield service equipment sitting idle.

Trican shares dropped 7.95 per cent to close at $3.59 after the deal was announced. It will result in Trican issuing shares and taking on Canyon’s $40 million worth of debt. Canyon shares, meanwhile, finished at $5.94, up 18.09 per cent.

Canyon shareholders will receive 1.7 shares of Trican for each share they own. That translates to an offer price of $6.63 per Canyon share, representing a 32 per cent premium to the stock’s Tuesday close.

Trican president and CEO Dale Dusterhoft said on a conference call that the company is acquiring a fleet of mostly active pressure pumping equipment that will generate cash for the combined company immediately.

“We are going to need that spare capacity down the road,” he said.

The rationale for the deal was not just to combine customer bases and pressure pumping fleets, but to consolidate in an effort to further drive down costs, Dusterhoft said.

The deal is expected to close in the second quarter.