Baker Hughes sells business line to Pelican Energy private equity firm

Houston-based private equity firm Pelican Energy Partners LP plans to spin a Baker Hughes Co. business line out as its own company.

Pelican has reached an agreement to buy the business called Surface Pressure Control Flow in a deal expected to close in late October or early November. Pelican plans to work with the existing SPC Flow leadership to establish it as a standalone company focused on pressure control products and services primarily in the U.S., though it also has operations internationally, according to a Pelican press release.

“This carveout transaction will enable the business to be a more focused, nimble and responsive company,” said Mike Scott, Pelican’s founder and managing partner.

The companies did not disclose the purchase price for the deal, and Pelican’s leadership declined to comment for this story. The press release did specify, however, that the deal is under Pelican’s third fund, which closed its $233 million raise in early 2018.

In this deal, Baker Botts acted as legal counsel to Pelican Energy Partners, and McDermott Will & Emery served as legal counsel to Baker Hughes. BofA Securities acted as financial adviser to Baker Hughes.

Baker Hughes (NYSE: BKR), like other companies in the oil field equipment and services business, has had a tough year. Social distancing as a response to the Covid-19 pandemic has driven oil and gas prices to incredible lows, and the companies in the upstream space — which would be Baker Hughes customers — have made deep cuts to their spending plans and therefore the total business available to Baker Hughes and its competitors.

Another massive oil field equipment and services company, Schlumberger NV (NYSE: SLB), also is selling off one of its business lines — it traded its OneStim business to Denver-based Liberty Oilfield Services Inc. in exchange for a significant ownership stake in Liberty.

Baker Hughes produced $4.74 billion in second-quarter revenue, down from $5.99 billion a year earlier and more than $5.42 billion in the first quarter of 2020, according to its financial report released July 22. That resulted in a $355 million net loss, bringing the company’s net loss for the first six months of 2020 to $16.45 billion. When excluding certain charges and credits, the adjusted net loss attributable to Baker Hughes was $31 million, or a loss of 5 cents per share, for the second quarter of 2020.

Source: Biz Journals