STEP Energy Services Ltd. Announces Ultra-Deep U.S. Coiled Tubing Acquisition & Changes to Executive Leadership Team

CALGARY, Alberta, Sept. 01, 2022 (GLOBE NEWSWIRE) -- STEP Energy Services Ltd. (the “Company” or “STEP”) is pleased to announce that its U.S. subsidiary, STEP Energy Services (USA) Ltd., has acquired four high-spec, ultradeep capacity coiled tubing units, ancillary equipment along with the divisional leadership and operational personnel from ProPetro Holding Corp. (“ProPetro”), a leading Permian Basin energy services company, for approximately $17.2 million CAD (the “Acquisition”). The Acquisition solidifies STEP as North America’s leading provider of deep capacity coiled tubing services, with a large footprint and deep expertise in the Permian Basin and other oil and gas producing areas in the southern U.S.

The ProPetro coiled tubing units are among the deepest capacity units in service in the U.S. today, capable of handling 30,000 feet of 2-3/8” and 2-5/8” strings of coiled tubing. The units were manufactured within the last four years. Three units are currently crewed and active with leading Permian E&P companies while the fourth requires minor capital upgrades prior to deployment, which is expected in 2023. These units and their crews have a very strong reputation in the field and are primarily used to drill out plugs in complex, extended lateral wells.

In addition to the four ultradeep coiled tubing units, the Acquisition includes a large fleet of support equipment including fracturing pumps, twin fluid pumpers, nitrogen pumpers and transports, cranes, tractors, and other miscellaneous equipment and inventory. The fracturing horsepower is required to support the fluid pumping requirements for the ultradeep capacity coiled tubing units. Similarly, the nitrogen pumpers are primarily used to support coiled tubing operations but can also be used in fracturing or industrial service applications.

“We have tremendous respect for the coiled tubing business that the ProPetro team has built,” said Mr. Steve Glanville, STEP’s President and Chief Operating Officer. “Lateral lengths in the Permian continue to increase and these four units, along with the highly skilled team of professionals who operate the equipment, build on STEP’s ability to service this market segment. Furthermore, the outlook for the coiled tubing market is improving rapidly as smaller competitors are consolidated and pricing moves higher. We are excited about how this acquisition will drive higher returns from our U.S. division.”

The Acquisition was funded by a combination of $2.77 million (USD) in cash and the issuance of 2,616,460 STEP common shares at a deemed price of $5.204 per share, calculated using the 30 day volume weighted average price of STEP common shares ending August 26, 2022. The shares issued pursuant to the Acquisition are subject to a resale restriction period of four months, applicable U.S. resale restrictions, as well as restrictions on the amount of shares that can be sold on a monthly basis thereafter. Based on current market dynamics STEP expects cash flow generated from the Acquisition to pay back the Company’s initial investment in 18 to 24 months.

CHANGES TO EXECUTIVE LEADERSHIP TEAM

STEP also announced today that Mr. Regan Davis, STEP’s chief executive officer, will retire as CEO of STEP effective September 30, 2022. Mr. Davis is a founding member of STEP and served as its CEO since the Company’s inception in 2011. Steve Glanville, STEP’s current President and Chief Operating Officer will assume the President and CEO role and replace Mr. Davis as an executive director on STEP’s board. Mr. Rory Thompson, STEP’s current President of Canadian Operations will assume the role of Chief Operating Officer. Mr. Davis will remain with STEP in an advisory capacity until the end of the year to assist with the transition.

“I am immensely proud of what our team of professionals has accomplished together in the last eleven years,” says Mr. Davis. “We have built an industry-leading North American organization, recognized for our enviable culture, an unwavering commitment to safety and exceptional field execution, technology, and service offerings. I believe it is the right time for me to step down, which will open the door to new possibilities for both myself and the company. As one of the original founders of STEP, Steve’s leadership and deep operational acumen, along with the support of our very talented senior leadership team, will allow STEP to continue to execute its vision, which instills a great sense of confidence about the company’s future success”.

Mr. Douglas Freel, Managing Director at ARC Financial and Chair of the Board of Directors of STEP commented, “The board undertook succession planning when STEP first went public and this announcement is the conclusion of that process. Regan has been an essential component of STEP’s success. His vision for the organization, passionate leadership, and contributions to the energy sector are evident. On behalf of the board and our shareholders, I would like to thank Mr. Davis for his years of dedicated service to STEP and wish him well in his retirement.”

FORWARD LOOKING STATEMENTS

Certain statements contained in this Press Release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). These statements relate to the expectations of management about future events, results of operations and the Company’s future performance (both operational and financial) and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “expects”, “will”, and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. While the Company believes the expectations reflected in the forward-looking statements included in this Press Release are reasonable, such statements are not guarantees of future performance or outcomes and may prove to be incorrect and should not be unduly relied upon.

In particular, this Press Release contains forward looking statements pertaining to expected use of equipment, cash flows resulting from the Acquisition (and resulting repayment period of the Acquisition cost), as well as the retirement of Mr. Davis, and the new roles of Mr. Glanville and Mr. Thompson.

The forward-looking information and statements contained in this Press Release speak only as of the date of the document, and none of STEP or its subsidiaries assumes any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. The reader is cautioned not to place undue reliance on forward-looking information.

ABOUT STEP

STEP is an energy services company that provides coiled tubing, fluid and nitrogen pumping and hydraulic fracturing solutions. Our combination of modern equipment along with our commitment to safety and quality execution has differentiated STEP in plays where wells are deeper, have longer laterals and higher pressures. STEP has a high-performance, safety-focused culture and its experienced technical office and field professionals are committed to providing innovative, reliable and cost-effective solutions to its clients.

Founded in 2011 as a specialized deep capacity coiled tubing company, STEP has grown into a North American service provider delivering completion and stimulation services to exploration and production (“E&P”) companies in Canada and the U.S. Our Canadian services are focused in the Western Canadian Sedimentary Basin (“WCSB”), while in the U.S., our fracturing and coiled tubing services are focused in the Permian and Eagle Ford in Texas, the Uinta-Piceance and Niobrara-DJ basins in Colorado and the Bakken in North Dakota.

Our four core values; Safety, Trust, Execution and Possibilities inspire our team of professionals to provide differentiated levels of service, with a goal of flawless execution and an unwavering focus on safety.

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