Pipeline company to go public
Ex-Schlumberger team is buying a majority stake
A former Schlumberger leadership team is partnering with a family-led pipeline firm in The Woodlands to create a publicly traded company called Strike Inc.
The team’s firm, Sentinel Energy Services, is buying a majority stake in Strike and taking the pipeline inspection and construction firm public with the slightly tweaked name that adds “Inc.” The plan is to rapidly expand Strike’s national footprint to service all types of pipelines from neighborhood natural gas systems to larger crude oil pipelines.
“There’s millions of miles of pipe in this country, and more than half of it is really old,” said Strike Chief Executive Steve Pate, who founded the company 15 years ago.
Sentinel Energy, based in Houston, is a so-called blank check firm, a public company created to find and acquire a private company in a sector that’s ripe for investment. Pipelines are increasingly in demand and expanding to transport record oil and natural gas production from the Permian Basin in West Texas and other U.S. shale plays.
Sentinel went public a year ago under the chairmanship of former Schlumberger CEO Andrew Gould. Sentinel is backed by the Houston private equity firm CSL Capital Management.
Sentinel will pay $345 million in cash for a 65 percent stake in Strike, with $150 million in additional investments from the Fidelity Management and Research Co., a unit of the Boston mutual fund company, and CSL. Strike will trade on the New York Stock
Exchange under the ticker “STRK” by the end of March.
Despite the recent oil bust, Strike doubled in size in the past four years, expanding from 3,000 employees to more than 6,000, including 300 in its headquarters in The Woodlands and almost 4,000 throughout Texas. Two of Strike’s biggest growth areas are servicing pipelines for the West Texas oil boom in the Permian Basin and closer to home with the petrochemical surge along the Houston Ship Channel and near Corpus Christi. Strike’s estimated 2018 revenues are $1.8 billion.
Pate will remain Strike’s CEO, with Gould as chairman. Gould headed the world’s largest oilfield services firm from 2003 until 2011. He then became the chairman of London-based BG Group, negotiating the $53 billion sale of BG to Royal Dutch Shell three years ago.
Gould said he was approached by various bankers and CSL to create what eventually became Sentinel. He partnered with Krishna Shivram to serve as Sentinel’s CEO. Shivram is a longtime Schlumberger executive who later served as interim chief executive of Weatherford International until another CEO was selected.
The plan was originally for Shivram to lead whatever company Sentinel acquired, but Gould and Shivram said they felt confident in the Pate family staying in charge. Steve Pate’s son, Cole, is the Strike president, and two of Steve’s brothers are executive vice presidents. Shivram will serve on the Strike board.
Despite Gould’s Schlumberger background in oilfield drilling and completions, he viewed that industry as overly crowded. So Sentinel focused on pipelines because of its steady revenues and room for growth, he said.
“This is going to be a very strong segment for a long time,” Gould said.
Despite Strike’s strong growth, Pate said the company still has only about a 2 percent national market share in the pipeline integrity and inspection sector. The many smaller regional players in the industry provide opportunities to make acquisitions and grow, he said. Pate added that a September series of natural gas pipeline explosions in the Boston suburbs underscored the need for more standardized pipeline inspections and regulations nationwide, presenting more opportunities for the company to grow.