Keane Group, Inc. (“Keane” or the “Company”) today announced
that it has placed orders for approximately 150,000 newbuild
hydraulic horsepower, representing three additional hydraulic
fracturing fleets, which will increase its position as a leading
provider of completions services in the U.S.
“Supply and demand fundamentals for U.S. oil and gas well
completions remain highly constructive for quality completions
service providers,” said James Stewart, Chairman and Chief
Executive Officer of Keane. “Favorable conditions have continued to
improve throughout the year, and robust 2018 capital budgets
announced by producers in recent weeks have amplified and validated
the growing demand for our services, which remains in excess of
supply. This visibility, coupled with additional pricing
improvements, provide the firmness of demand and favorable
economics we require to deploy newbuild capital and further our
growth trajectory. Given the deployment of all of our previously
idled horsepower in 2017, and our partnership with the largest and
most efficient customers, we are well positioned to preemptively
extend our growth and capitalize on a tightening supply chain. In
response, we made the strategic decision to place orders for three
additional Tier 4 hydraulic fracturing fleets and wireline trucks,
which we expect to deploy in the Permian Basin in response to
strong demand. Once delivered, these additional fleets will
increase our total hydraulic horsepower to more than 1.3 million,
with nearly 800,000 hydraulic horsepower in the Permian Basin
concentrated in the Delaware Basin.”
“Improving market signals throughout 2017 have resulted in
customer discussions regarding committed newbuild fleets with
pricing that now satisfies our margin requirements and capital
return thresholds,” said Greg Powell, President and Chief Financial
Officer of Keane. “We are in advanced discussions with both
existing and new customers and expect to execute dedicated
agreements for the new fleets by the end of the first quarter of
2018. Further, our established relationships with component and
assembly providers have allowed us to optimize newbuild cost and
secure beneficial delivery dates, with two fleets expected to be
delivered and deployed by the end of the second quarter of 2018,
and a third by the end of the third quarter of 2018. We expect
these newbuilds to initially generate annualized Adjusted Gross
Profit per fleet of greater than $20 million, representing
attractive payback economics consistent with our strategic plan.
Total capital expenditures for the three fleets will be
approximately $115 million, or approximately $770 per hydraulic
horsepower, and we intend to fund such capital expenditures out of
cash on hand and expected cash flow from operating activities, as
20% of the cost is due on signing with the balance due upon
delivery. This favorable price per hydraulic horsepower is driven
by our established supplier relationships, timing of orders, as
well as technological advancements to optimize our wellsite
footprint. We expect that growth from these newbuilds, in addition
to the profitability for our existing 26 fleets, will generate
attractive cash flow in 2018. We remain committed to assessing all
potential opportunities to maximize shareholder value over the near
and long-term, including organic growth, acquisitions, capital
return and debt repayment.”
About Keane Group, Inc.
Headquartered in Houston, Texas, Keane is one of the largest
pure-play providers of integrated well completion services in the
U.S., with a focus on complex, technically demanding completion
solutions. Keane's primary service offerings include horizontal and
vertical fracturing, wireline perforation and logging, engineered
solutions, and cementing, as well as other value-added service
offerings. Keane currently owns approximately 1.2 million hydraulic
fracturing horsepower and 31 wireline trucks and provides
engineered solutions. Keane’s broad geographic footprint spans the
most prolific U.S. shale basins including the Permian, Bakken,
Marcellus/Utica, and SCOOP/STACK. Keane prides itself on its
outstanding employee culture, its efficiency and its ability to
meet and exceed the expectations of its customers and communities
in which it operates.
Definitions of Non-GAAP Financial Measures
Keane has included both financial measures compiled in
accordance with GAAP and certain non-GAAP financial measures in
this press release, including Adjusted Gross Profit. Adjusted Gross
Profit provides supplemental information which Keane believes is
useful to analysts and investors to evaluate its ongoing results of
operations, when considered alongside GAAP measures such as net
income and operating income. Adjusted Gross Profit excludes the
financial impact of items management does not consider in assessing
Keane’s ongoing operating performance, and thereby facilitate
review of Keane’s operating performance on a period-to-period
basis. Other companies may have different capital structures, and
comparability to Keane’s results of operations may be impacted by
the effects of acquisition accounting on its depreciation and
amortization. As a result of the effects of these factors and
factors specific to other companies, Keane believes Adjusted Gross
Profit provides helpful information to analysts and investors to
facilitate a comparison of its operating performance to that of
other companies.
Adjusted Gross Profit is defined as net income (loss) adjusted
to eliminate the impact of interest, income taxes, depreciation and
amortization, along with certain items management does not consider
in assessing ongoing performance, further adjusted to eliminate the
impact of all activities in the Corporate segment, such as selling,
general and administrative expenses, along with cost of services
that management does not consider in assessing ongoing
performance.
Forward-Looking Statements
The statements contained in this release that are not historical
facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Words such as “may,”
“will,” “could,” “should,” “expect,” “plan,” “project,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,”
“pursuant,” “target,” “continue,” and similar expressions are
intended to identify such forward-looking statements. The
statements in this press release that are not historical
statements, including statements regarding the Company’s plans,
objectives, future opportunities for the Company’s services, future
financial performance and operating results and any other
statements regarding Keane's future expectations, beliefs, plans,
objectives, financial conditions, assumptions or future events or
performance that are not historical facts, are forward-looking
statements within the meaning of the federal securities laws. These
statements are subject to numerous risks and uncertainties, many of
which are beyond Keane's control, which could cause actual results
to differ materially from the results expressed or implied by the
statements. These risks and uncertainties include, but are not
limited to the operations of Keane; the anticipated funding and
expected delivery of the newbuild fleets; the effects of the
business combination of Keane and RockPile, including the combined
Company’s future financial condition, results of operations,
strategy and plans; potential adverse reactions or changes to
business relationships resulting from the completion of the
RockPile transaction; expected synergies and other benefits from
the transaction and the ability of Keane to realize such synergies
and other benefits; results of litigation, settlements and
investigations; actions by third parties, including governmental
agencies; volatility in customer spending and in oil and natural
gas prices, which could adversely affect demand for Keane's
services and their associated effect on rates, utilization, margins
and planned capital expenditures; global economic conditions;
excess availability of pressure pumping equipment, including as a
result of low commodity prices, reactivation or construction;
liabilities from operations; weather; decline in, and ability to
realize, backlog; equipment specialization and new technologies;
shortages, delays in delivery and interruptions of supply of
equipment and materials; ability to hire and retain personnel; loss
of, or reduction in business with, key customers; difficulty with
growth and in integrating acquisitions; product liability;
political, economic and social instability risk; ability to
effectively identify and enter new markets; cybersecurity risk;
dependence on our subsidiaries to meet our long-term debt
obligations; variable rate indebtedness risk; and anti-takeover
measures in our charter documents.
Additional information concerning factors that could cause
actual results to differ materially from those in the
forward-looking statements is contained from time to time in
Keane's Securities and Exchange Commission (“SEC”) filings,
including the most recently filed Forms 10-Q and 10-K. Keane's
filings may be obtained by contacting Keane or the SEC or through
Keane's website at http://www.keanegrp.com or through the SEC's
Electronic Data Gathering and Analysis Retrieval System (EDGAR) at
http://www.sec.gov. Keane undertakes no obligation to publicly
update or revise any forward-looking statement.
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version on businesswire.com: http://www.businesswire.com/news/home/20171214005454/en/
Keane Group, Inc.Investor Relations713-893-3602Marc Silverberg,
ICRmarc.silverberg@icrinc.com
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