Oilfield services firm DTI to list in New York via $319 mln SPAC merger

Drilling Tools International

14/02/2023 09:30

By David French
       Feb 14 (Reuters) - Drilling Tools International (DTI),
which builds and rents out drilling equipment for oil and gas
companies, has agreed to combine with special purpose
acquisition company (SPAC) ROC Energy Acquisition Corp  ROC.O ,
the companies told Reuters.
    The merger values DTI at $319 million, with the deal
providing the company with $217 million of capital, much of
which is from the proceeds of the blank check firm's initial
public offering (IPO) in December 2021.
    DTI is majority owned by Hicks Equity Partners, the buyout
arm of the family office of Thomas O. Hicks, the Dallas-based
investor whose has previously co-owned sports teams including
the Texas Rangers baseball franchise and English soccer team
Liverpool FC.
    Houston-based DTI counts energy producers Chevron Corp
 CVX.N , ConocoPhillips  COP.N  and Occidental Petroleum Corp
 OXY.N , as well as large services players such as Baker Hughes
Co  BKR.O  and SLB  SLB.N , among its customers.
    The tie-up marks a rare deal in the business of oilfield
services, which for years has been grappling with cost cuts from
customers, commodity price fluctuations, and high debt levels.
    More recently, though, higher crude prices have provided a
tailwind for oilfield services companies as energy producers
seek to drill more. Supply chain problems and labor shortages
have also allowed services firms to raise rates.
    Daniel Kimes, chief executive of ROC, said the positive
market dynamics and DTI's experienced management team drew the
special purpose acquisition company (SPAC) to the deal.
    "This is a really sophisticated business generating real
returns for investors," he said in an interview.
    Going public through a SPAC merger was "more efficient" than
listing through a traditional IPO, DTI Chief Executive Wayne
Prejean told Reuters. 
    A SPAC deal typically helps companies bypass the lengthy IPO
regulatory process and is beneficial for energy companies whose
listing plans can be derailed by commodity price fluctuations as
well as negative stock market conditions.
    DTI, which primarily operates in North America, plans to use
the newly raised capital to expand in the Middle East and
Europe, Prejean added.
    "We're coming out of the gate debt-free and ready to run,"
said Prejean.
 (Reporting by David French in New York; editing by Uttaresh.V)
 ((davidj.french@thomsonreuters.com;))