Oilfield services market recovery too much for KLX to give up

By Luke Geiver | May 07, 2018

KLX Inc., a distributor of equipment to the aerospace industry and a service provider to the exploration and production sector, is selling its aerospace assets to aviation giant the Boeing Co. KLX Energy Services will spin-off and remain operating.

“KLX Energy Services is well positioned to participate in the ongoing oilfield services market recovery,” said Amin Khoury, chairman and CEO. “We are seeing very strong demand for our services and products.”

The spun-off company will be publicly traded. It will be initialing capitalized by $50 million in cash and an undrawn credit facility.

Since its founding in 2013, KLX ES has grown its presence in the Bakken, Marcellus, DJ Basin, Permian, Haynesville and Eagle Ford. Completion work accounts for 47 percent of the services’ revenue, with production accounting for 23 percent and well intervention making up the remaining 30 percent of revenue. At 40 percent, the Bakken makes up the largest region served by KLX with the southwest coming in at 34 percent and the Northeast accounting for 26 percent. The energy services company currently employs more than 1,100.

It became apparent that the performance of the energy service business was exceeding expectations and numerous entities were interested in buying the business during a strategic review. The company intends to continue to attract and invest in talent.

Compared to the previous year, KLX ES is projected to undergo a 55 percent increase in revenue and a nearly 300 percent increase in adjusted EBITDA. In 2017 it generated $321 million but already for this year the company expects to make $500 million.

The deal with Boeing is valued at $2.4 billion or $63 per share in immediate cash to shareholders.