Basic Energy Services turns down merger offer from Key Energy

US-based well site services provider Basic Energy Services has rejected a merger proposal received from Key Energy Services.

The company considered the offer and decided that it will continue to pursue its independent strategy to maximise stockholder value.

In a statement, Basic Energy Services said: “After a careful review, conducted in consultation with its advisers, the company’s board of directors unanimously concluded that the proposal is not in the best interests of Basic and its stockholders.”

The proposal made by Key Energy sought to create a production-focused oilfield services provider, in which the company’s shareholders would hold 51% and Basic Energy shareholders would own the remaining stake.

The company pitched the offer on the premise that the businesses are complementary in nature and that the merger could result in synergies estimated to be worth $65m a year.

Key Energy noted that the combined entity would have estimated revenues of $1.8bn next year and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of more than $275m.

The combination would also enhance rental and fishing and coiled tubing franchises.

Key Energy president and CEO Robert Saltiel said: “We are ready to move ahead swiftly to finalise a combination with Basic. We believe such a combination will create significant value for both shareholder groups and result in the combined company being a leader in the production services segment.”

Key Energy noted that if the merger goes through, the combined entity will focus on delivering well services and fluid management.