Argonaut Forms American Cementing, Buys BJ Assets

Argonaut Private Equity has acquired the cementing services business of BJ Services which filed for bankruptcy in July 2020 after failing to reach an agreement with its lenders.

Tomball, Texas-based BJ Services is a provider of hydraulic fracturing and cementing services to upstream oil and gas companies. The company was founded in 1872 as the Byron Jackson Company and in 1974 was acquired by Hughes Tool. In 1987, Hughes Tool merged with Baker International to form Baker Hughes and in 1990 Baker Hughes spun off BJ Services into a public company only to acquire it again in 2010 for $5.5 billion. In 2016, Baker Hughes spun out its pressure pumping assets into a joint venture – operating as BJ Services – with Allied Energy Services, a pressure pumping company owned by Houston-based CSL Capital Management.

Included in the Argonaut transaction is the retention of 260 employees of the BJ cementing business, as well as company assets and equipment including its bulk plants and technical labs. No fracturing assets of BJ were acquired in the acquisition.

With the close of the transaction, BJ’s cementing services now operate as American Cementing and is active in every major oil and gas basin throughout the United States.  The company’s cementing services are used by oil and gas companies to prepare a well for further drilling, production, or abandonment. American Cementing’s services include laboratory testing, blending at bulk plants, mixing and pumping operations at well site locations, and acid washing to increase production and remove well-bore damage.

“We are pleased that American Cementing was able to retain the talent and expertise needed to continue operations and provide a seamless transition to our customers,” said Aaron James, chief operating officer of American Cementing. “With the return to a fiscally-stable business model and clean balance sheet, we can build upon the standard of services and products for which we are known. With the assistance of Argonaut, we have the capacity to reach an even larger customer base within our major basin locations.”

“The addition of American Cementing to the Argonaut portfolio combines our expertise in efficient operations management with our experience in the oil and gas industry,” said Steve Mitchell, the CEO of Argonaut. “Argonaut’s capital investment provides the strength of our financial support to ensure American Cementing continues its reputation as a leading cementing service provider to upstream oil and gas companies throughout the United States. We are excited to provide American Cementing with an unlevered platform that is focused solely on cementing operations.”

Tulsa-based Argonaut invests in companies that are active in the energy services, manufacturing and industrial sectors. In August 2019, Argonaut held a final closing of Argonaut Private Equity Fund IV LP at its hard cap of $400 million. The firm was founded in 2002 and over its history has invested more than $3 billion of capital in more than 100 direct investments.

“We differentiate ourselves in the private equity industry because we value the legacy established by our business enterprises and work side-by-side as partners in their success,” added Mr. Mitchell. “This is our third acquisition within the past two months. Despite the ongoing pandemic, Argonaut is actively reviewing opportunities and looks forward to completing more transactions.”

Simmons Energy, a division of Piper Sandler, was the financial advisor to BJ Services on this transaction.

Private Equity Professional | September 4, 2020

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