Nine Energy buys Magnum Oil Tools for $493 MM

HOUSTON -- Nine Energy Service has entered into an agreement to acquire Magnum Oil Tools International, a downhole technology provider serving the global oil and gas industry for over a decade.

Magnum has a broad offering of proprietary downhole completions products, including dissolvable and composite frac plugs, as well as a number of other patented consumables.

The Magnum partnership solidifies Nine as one of the premier providers of completion focused technology combined with excellence in both service execution and conveyance capability. Magnum provides Nine with a strong, first-mover advantage in the dissolvable frac plug market due to its extensive track record of successful market penetration and positions Nine as a leading provider of differentiated isolation tools with the ability to service the entire addressable frac plug market.

Magnum brings a proven ability to design, engineer and commercialize applicable and reliable downhole technologies, as well as stay ahead of industry trends. Nine expects the addition of Magnum’s portfolio of completion tools to be well suited to help operators reduce risk and cycle times as completions continue to become more complex with longer laterals, more stages and mega-well pads.

“We could not be more thrilled to partner with Magnum. At Nine, we constantly focus on adding differentiated technology to our portfolio of completion tools to enable operators to more reliably and effectively complete the horizontal wellbores of tomorrow. The evolution of technology in the oil field demands a team with a demonstrated track record and ability to transform their offerings and think-forward. This particular team is exceptional. Magnum will propel Nine to a more balanced profile of completion tools, creating excellent barriers to entry while simultaneously building a business that is less labor and less capital intensive and more free cash flow generative,” said Ann G. Fox, Nine’s President and CEO.

“This will allow us to navigate a very difficult labor market and supports our approach of blending capital intensity, helping us provide more sustainable through-cycle returns for our shareholders. We believe the combination of capabilities within Nine and Magnum creates a unique and differentiated oil field service platform and we will be able to leverage strengths from both sides to provide better service for our customers and accelerate profitable growth moving forward,” said Fox.

“At Nine, our culture is always top-of-mind to ensure we pick the right and best teams to partner with. Lynn and his team’s entrepreneurial mindset, innovation and approach to running a business should fit seamlessly with the rest of the Nine team,” concluded Fox.

“We are honored to join the team at Nine and see this as a great next step for Magnum’s business evolution,” said Lynn Frazier, CEO and founder of Magnum. “The combination of Nine and Magnum made sense as we looked for the right partner with alignment in our culture and priorities. Together, we will be able to offer superior technology and service to our customers and provide an excellent environment for our employees to develop and help grow the company.”

Total upfront transaction consideration of $493 million consists of a combination of approximately $334 million of cash, as well as 5 million shares of Nine common stock. The terms of the purchase agreement also include the potential for additional future contingent payments.