Baker Hughes said it has reached an agreement with CSL Capital Management and Goldman Sachs Group's merchant banking division to create a hydraulic fracturing company in which Baker Hughes will own a 46.7% stake.
Under terms of the agreement, oilfield services provider Baker Hughes (bhi) will contribute its North American land cementing and hydraulic fracturing businesses, which comprises of assets in the United States and Canada.
The agreement does not include Baker Hughes' international pressure pumping businesses or its Gulf of Mexico offshore pressure pumping operations, which it will continue to operate.
Upon closing, private equity firm CSL Capital Management will contribute its Allied Energy Services platform to the new company, which provides hydraulic fracturing and cementing services on land in North America.
CSL Capital Management and Goldman Sachs's (gs) West Street Energy Partners (WSEP) will together own 53.3% of the privately-held new company, and contribute $325 million in cash.
About $175 million will be used to strengthen the balance sheet of the new company, while the remaining $150 million will go to Baker Hughes.
The new company will operate under the Baker Hughes-owned BJ Services brand and will be headquartered in Tomball, Texas.
Warren Zemlak, who is the current president & CEO of Allied Energy Services, will head the new company.
Wells Fargo Securities served as Baker Hughes' financial adviser.