With $135 million in fresh capital, a Houston oil services company plans to hire hundreds of new employees while ramping up operations to take advantage of a backlog in hydraulic fracturing work in Texas and Louisiana shale fields.
Platinum Energy Solutions Inc. received the capital injection in mid-March from Houston energy-focused private equity firm Layton Corp. and Los Angeles-based PE firm Clearlake Capital Group.
J. Clarke Legler, Platinum CFO, said demand for natural gas development in the shale formations has led to a hydraulic fracturing backlog for hundreds of wells in the Haynesville formation along the Texas-Louisiana border and the South Texas Eagle Ford formation.
Hydraulic fracturing, or “fracking,” involves injecting hydraulic fluid into underground rock formations to release trapped oil or natural gas.
To capitalize on the demand spike, Layton CEO Daniel Layton said Platinum is “hiring daily,” adding to its current head count of about 50.
“We are going to grow out of Houston,” said Layton. “Platinum expects to have several hundred (employees) by the end of the year.”
The company is led by CEO Charles Moncla Jr., who operated Lafayette, La.-based oil services firm Moncla Well Service Inc. until it was sold to Houston’s Key Energy Services Inc. in 2007.
In addition to Lafayette, Platinum has operational facilities in San Antonio and Longview, and plans to open new field offices in Shreveport, La., and Seguin.Before the capital raise, Platinum was already in Layton’s portfolio as a startup, he said, but Clearlake invested the most in the latest round of funding.
“Clearlake led the offering, they wanted exposure in the space,” noted Layton.Layton said his firm is continuing to look for other investments between $100 million and $500 million in the oil service and energy tech areas.
Platinum’s Legler said the company will use the capital to purchase 125,000-horsepower of additional pumping capacity for its hydraulic fracturing operations. The company has two long-term service contracts with a major independent firm and a “near-major” firm.
“Only a handful of people can do (fracking), and they are exceedingly in demand right now,” said Fred Hagemeyer, managing director at Overland Park, Kan.-based engineering consulting and construction company Black & Veatch Corp.“In Haynesville, a lot of the shale there is deep, so you have higher pressure. It limits the kind of service companies who can handle it.”
Executives at Houston-based companies Swift Energy Co. (NYSE: SFY), Schlumberger Ltd. (NYSE: SLB) and Oasis Petroleum Inc. (NYSE: OAS) have mentioned shale fracking backlogs in other regions in their fourth-quarter conference calls, as well.
In shale formations where fracking service companies are in high demand, businesses often dictate to the rig operator what day they will arrive at the site to inject fracking fluid into the well, said Phillip Stark, vice president of industry relations at Cambridge, Mass.-based research group IHS CERA.
“(Some companies) have started to manage their drilling time along with the availability of having a frack truck right there when they need it,” he said.
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