Halliburton, the world’s second biggest oilfield services company, with dual headquarters in Houston and Dubai, has agreed to acquire the well-intervention specialist Boots & Coots for US$240.4 million (Dh882.9m) in stock and cash.
The announcement closely follows the death last month of Edward “Coots” Matthews, one of the founders of Boots & Coots. He started the Houston company with fellow fireman Asger “Boots” Hansen in 1978.
Before starting their company, the pair were lieutenants of Red Adair, the famous oil well fireman who helped extinguish massive oilfield fires in Kuwait after the 1991 Gulf War.
Under terms of the deal, which requires regulatory and shareholder approvals, Boots & Coots shareholders would receive $1.73 in cash and $1.27 in Halliburton stock for each share held, representing a 28 per cent premium to Boots & Coots’s $2.35 closing price in New York on Friday.
Halliburton said the acquisition would allow it to offer a more complete suite of pressure control and well-intervention services, which would reduce the risk of oil well disasters such as blowouts and fires while enhancing the firm’s ability to respond to such events.
Halliburton plans to form a product-service line after the acquisition, combining its coiled tubing and hydraulic workover operations with Boots & Coots’s services in well intervention and pressure control.
The combination “will help us improve full life-cycle returns for our customers”, said Marc Edwards, the senior Halliburton vice president of completion and production.
“Combining the resources of both companies creates the premier intervention company across the globe,” he said.
Halliburton’s coiled tubing and hydraulic workover services allow the drilling of oil and gas wells in difficult conditions that require precise pressure control. The coiled tubing replaces conventional strings of rigid pipe sections suspended from derricks during drilling. The newer approach is increasingly used to increase output from mature oil and gas deposits and to squeeze production from challenging, “unconventional” reservoirs. In all these situations, the potential for pressure-related problems during the drilling process is relatively high.
Boots & Coots’s pressure control services are designed to reduce the number and severity of “critical” events including well fires and blowouts caused by a loss of control in the well. A blowout, which is equivalent to an underground explosion, can result in the uncontrolled release of oil and gas from the wellhead under high pressure, and to an immense blaze if the inflammable gas and liquid catches fire. In terms of casualties, environmental damage and financial loss, a blowout is one of the worst disasters that can befall an oil and gas producer.
Boots & Coots has become known for putting out some of the world’s biggest oilfield fires. It was one of three main US and Canadian specialist firefighting outfits that extinguished 700 blazing Kuwaiti oil wells in 1991.
Halliburton said it would retain Boots & Coots’s management to head the new division, as well as the iconic Boots & Coots name and most of the company’s 700 employees.
“It’s a great opportunity. We’ve worked real hard to get here, and this just moves us along that much faster,” Jerry Winchester, the Boots & Coots chief executive, told the Houston Chronicle.
With its friendly offer for Boots & Coots, the much bigger Halliburton, with about 50,000 employees worldwide, has joined the wave of mergers and acquisitions that has been sweeping the oilfield services sector for the past year, since global oil and gas activity declined due to lower prices and demand.
This year, Schlumberger, which was already the world’s biggest oilfield services firm, agreed to merge with Smith International in an $11bn stock transaction.
Last August, Baker Hughes, another big oilfield services firm, announced a $5.5bn merger with BJ Services.
Before the deal for Boots & Coots was announced, Halliburton’s stock closed on Friday at $31.57 in New York,
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