To meet growing demand, C&J Energy buys shale cementing service

By Luke Geiver | October 31, 2017

The demand for cementing services was outpacing C&J Energy Services available supply prior to its $132.5 million acquisition of O-Tex Holdings Inc. Through its purchase of O-Tex, the fourth largest cementing service in the U.S., C&J Energy CEO Don Gawick said the company will now be able to appease client requests asking for more cementing work.

Cementing services are used to ensure the stability of a wellbore and the process is required on all new well construction projects. According to Gawick, C&J Energy has put a new emphasis on new well construction and the deal with O-Tex will expand its cementing service size and geographic footprint. C&J Energy will now have a major presence in the Delaware Basin, the Midcontinent, the Rockies and the Northeast.

O-Tex was founded in 2007 by oilfield veterans. Since then, the company has grown and currently has 81 cementing units that on average are only four to five years old. O-Tex, which recently opened another facility to serve West Texas, also has 8 cementing labs and can handle more technical jobs. In 2014, O-Tex generated roughly $255 million in revenue.

For C&J Energy, cementing service revenue is coming on strong in the last few quarters, Ganwick said. In the past year, revenue related to cementing services has more than doubled, he said. Once C&J Energy is able to crew-up the idle units that O-Tex is not currently running, the company intends to put several new units to work in West Texas.

“The addition of O-Tex to our portfolio advances several of our key strategic goals and strengthens our capabilities as one of the most geographically diverse and technologically advanced providers of well construction, intervention and completion services in the U.S.,” Ganwick said. “This transaction meets our criteria for strategic growth in that it expands the scale, geographic reach and customer base of a core service line, notably at a time when our existing cementing assets are operating at full capacity.”

In addition to the cash component of the deal, C&J Energy will be offering 4.42 million shares of common stock.