SPN: Bite Size Acquisition All Part of Superior Energy’s Growth Investments
We have generally been bullish on energy, and that enthusiasm extends to Large Cap Watch List (Track at Marketocracy) member Superior Energy Services (SPN) which today announced:
Superior Energy Services, Inc. announced today that it has acquired Advanced Oilwell Services, Inc. for $24.1 million in cash. Additionally, the agreement includes a potential earnout payment of $6.0 million if Advanced Oilwell Services achieves certain financial objectives….Kenneth L. Blanchard, Superior’s President and Chief Operating Officer, stated, “This acquisition, which is expected to be accretive to earnings in 2007, fits in nicely with our desire to expand our market share in pumping and stimulation services. Advanced Oilfield Services positions us well in the East Texas market and creates a platform for future expansion into South Texas and beyond. The acquisition also provides Superior with pressure pumping package fabrication capacity for both internal use and external sale. Finally, we feel fortunate to be welcoming such an experienced management group to the Superior team.”
$24 million is a fairly bite-sized acquisition for Superior, which has an enterprise value of $3.5 billion. However, given that sales have doubled over the last two years and net income is up more than five-fold, it is no surprise the company is investing all of its cash back into its core business. For a company growing this fast to sport a price/earnings multiple that barely cracks double digits is one of the reasons for our aforementioned bullishness.
Like this article? Why not try out:
