ALLIS CHALMERS ENERGY INC. (ALY) SPO
|Company Name||ALLIS CHALMERS ENERGY INC.|
|Company Address||REMINGTON SQUARE
10613 W SAM HOUSTON PARKWAY, SUITE 600
HOUSTON, TX 77064
|CEO||Munawar H. Hidayatallah|
|Employees (as of 12/1/2006)||2477|
|State of Inc||--|
|Fiscal Year End||12/31|
|Exchange||American Stock Exchange|
|Shares Over Alloted||--|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||2/19/2007|
We expect that our net proceeds from the sale of common stock in the offering will be approximately $100.1 million, or $115.2 million if the underwriters’ over-allotment option is exercised in full, at a public offering price of $17.65 per share and after deducting underwriter discounts and commissions and estimated transaction fees and expenses payable by us. We plan to use the net proceeds from this offering, together with approximately $243.3 million in net proceeds from our concurrent offering of approximately $250.0 million aggregate principal amount of senior notes due 2017, to repay the amount outstanding under our $300 million bridge loan facility and for general corporate purposes. At December 31, 2006, approximately $300 million was outstanding under our bridge loan facility. As of December 31, 2006, the weighted average interest rate on the borrowings outstanding under our bridge loan facility was 10.6%. Our bridge loan facility matures in June 2008. Debt incurred under this facility was used to finance our recent acquisition of substantially all the assets of Oil & Gas Rental.
We experience significant competition in all areas of our business. In general, the markets in which we compete are highly fragmented, and a large number of companies offer services that overlap and are competitive with our services and products. We believe that the principal competitive factors are technical and mechanical capabilities, management experience, past performance and price. While we have considerable experience, there are many other companies that have comparable skills. Many of our competitors are larger and have greater financial resources than we do. We believe that there are five major directional drilling companies, Schlumberger, Halliburton, Baker Hughes, W-H Energy Services (Pathfinder) and Weatherford, that market both worldwide and in the United States as well as numerous small regional players. Our largest competitor for compressed air drilling services is Weatherford. Weatherford focuses on large projects, but also competes in the more common compressed air, mist, foam and aerated mud drilling applications. Other competition comes from smaller regional companies. Two large companies, Frank’s Casing Crew and Rental Tools and Weatherford, have a substantial portion of the casing and tubing market in South Texas. The market remains highly competitive and fragmented with at least 30 casing and tubing crew companies working in the United States. Our primary competitors in Mexico are South American Enterprises and Weatherford, both of which provide similar products and services. There are two other significant competitors in the chemical injection services portion of the production services market, Weatherford and Dyna Coil. We believe we own approximately 30% of the capillary tubing units in the southwestern United States that are used for chemical injection services. The rental tool business is highly fragmented with hundreds of companies offering various rental tool services. Our largest competitors include Weatherford, Oil and Gas Rental Tools, Quail Rental Tools and Knight Rental Tools.
We are a multi-faceted oilfield services company that provides services and equipment to oil and natural gas exploration and production companies, domestically in Texas, Louisiana, New Mexico, Colorado, Oklahoma, Mississippi, Utah, Wyoming, offshore in the Gulf of Mexico, and internationally in
Argentina and Mexico. Our existing business segments are: Directional Drilling Services. We employ approximately 75 full-time directional drillers utilizing state-of-the-art equipment for well planning and engineering services, directional drilling packages, downhole motor technology, well site directional supervision, exploratory and development re-entry drilling, downhole guidance services and other drilling services, including, logging-while-drilling and measurement-while-drilling services. Rental Tools. We provide specialized rental equipment, including premium drill pipe, heavy weight spiral drill pipe, tubing work strings, blow out preventors, choke manifolds and various valves and handling tools, for both onshore and offshore well drilling, completion and workover operations. International Drilling. With our recent acquisition of DLS Drilling, Logistics & Services Corporation, or DLS, in August 2006, we entered into the contract drilling and repair services business. DLS provides drilling, completion, repair and related services for oil and gas wells in Argentina. DLS also offers a wide variety of other oilfield services such as drilling fluids and completion fluids, engineering, field maintenance and logistics to complement its customers’ field organization. Casing and Tubing Services. We provide specialized equipment and trained operators for a variety of pipe handling services, including installing casing and tubing, changing out drill pipe and retrieving production tubing for both onshore and offshore drilling and workover operations. Compressed Air Drilling Services. We provide compressed air equipment, drilling bits, hammers, drilling chemicals and other specialized drilling products for underbalanced drilling applications. With a combined fleet of over 130 compressors and boosters, we believe we are one of the largest providers of compressed air or underbalanced drilling services in the United States. Production Services. We provide specialized equipment and trained operators to install and retrieve capillary tubing, through which chemicals are injected into producing wells to increase production and reduce corrosion, and workover services with coiled tubing units. Our principal executive offices are located at 5075 Westheimer, Suite 890, Houston, Texas 77056, and our telephone number at that address is (800) 997-9534. Our website address is http://www.alchenergy.com.
|Auditor||UHY Mann Frankfort Stein & Lipp CPAs, LLP|
|Company Counsel||Andrews Kurth LLP|
|Lead Underwriter||RBC Capital Markets Corp|
|Transfer Agent||Continental Stock Transfer & Trust Company|
|Underwriter||Johnson Rice and Co. L.L.C|
|Underwriter||Morgan Keegan and Co., Inc|
|Underwriter||Pritchard Capital Partners, LLC|
|Underwriter Counsel||Shearman & Sterling LLP|
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