Trican Well Service employees walk towards liquid nitrogen storage tanks at a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012.Jeff McIntosh/The Globe and Mail
Trican Well Service Ltd. said it reached a deal to sell its U.S. pressure pumping business to Texas-based Keane Group for $285-million, driving the shares up more than 80 per cent.
Calgary-based Trican said it would use proceeds from the transaction to pay down its total debt load to roughly $235-million. It also announced a deal Tuesday with lenders that removes some financial obligations associated with its debt until the third quarter of 2016.
The deal gives Trican breathing room as it struggles with a heavy debt load and a sharp contraction in industry activity levels due to the collapse of oil prices.
Analysts had said the sale of the U.S. division could help the company meet its near-term debt maturities, while reducing the risk of insolvency. TD Securities Inc. had estimated the value of the U.S. assets anywhere between $140-million and $450-million.
"The U.S. business sale transaction, together with this further covenant relief package, puts us in a strong financial position to continue operations and focus on generating profits from our remaining businesses throughout this period of volatility," Trican chief executive officer Dale Dusterhoft said in a statement.
The stock jumped as much as 84 per cent in afternoon trading on the Toronto Stock Exchange after briefly being halted.
Under the deal, Trican will also receive a 10-per-cent equity stake in Keane as well as two seats on the privately held company's board. The sale is expected to close in mid-March.