Oil field water providers agree to merge

By Jordan Blum

Select Energy Services said it would acquire Houstonbased Rockwater Energy Solutions, solidifying its position as the nation’s largest provider of water services to the oil and gas industry.

Select, which is headquartered north of Dallas in Gainesville, is buying Rockwater in an all-stock deal valued at more than $470 million. The oil and gas industry uses vast amounts of water to drill and hydraulically fracture wells. Hydraulic fracturing, or fracking, pumps a mix of pressurized water, sand and chemicals underground to crack shale rock and release oil and gas.

As oil and gas companies drill deeper wells vertically and horizontally and frac more areas of the well, they are demanding more water. Wells routinely use more than 20 million gallons of water each, up from about 2 million gallons less than a decade ago.

The deal looks like a “logical marriage” that creates a sizable company with fully integrated water offerings to meet growing demand, said George O’Leary, an oil services

analyst at the Houston energy investment firm Tudor, Pickering, Holt & Co.

Select went public this spring under the stock ticker “WTTR” while Rockwater is privately held.

The companies each employ about 2,000 people. The combined company will operate under the Select name and keep its headquarters in Gainesville.

Select also has a Houston office, and executives expect limited job cuts as they consider consolidating their offices in the Uptown Park area.

Select shareholders will own 64.5 percent of the combined company, which would have revenues of $1.3 billion a year.

Rockwater CEO Holli Ladhani will become the new president and CEO of Select, while current CEO John Schmitz will serve as the executive chairman of the merged company. Ladhani said she will continue to live in Houston, although she’ll spend most of her time traveling.

Schmitz founded Select nearly 10 years ago.

“This is a very exciting opportunity to combine two companies that are highly focused on the challenge of providing world-class water-related services to the major shale basins,” Schmitz said in a statement.

“As we are experiencing a strong recovery in many of our markets, we have the opportunity to combine our equipment, management teams and over 3,200 field personnel to provide more comprehensive services to our customers.”

Both Select and Rockwater were created with the funding of private equity firms.

Select is backed by New York-based Crestview Partners, while Rockwater was created through Houston-based SCF Partners. Crestview and SCF would become Select’s two largest shareholders, respectively.

Rockwater was founded in 2011 through the mergers of four companies — Odessa-based Benchmark Performance Group; Canada-based EnerMAX Services; Boyd, Texas-based Red Oak Water Transfer; and Midland-based Reef Services Holdings.

The deal is expected to close by the end of September.

“We have the opportunity to ... to provide more comprehensive services to our customers .” John Schmitz, Select Energ y Services CEO