HOUSTON, May 18, 2020 /PRNewswire/ -- Flotek
Industries, Inc. ("Flotek" or the "Company") (NYSE: FTK) announced
today it has acquired 100% ownership of JP3 Measurement, LLC
("JP3"), a privately held leading data and analytics technology
company, in a cash-and-stock transaction. The transaction is valued
at approximately $34.4 million,
comprised of $25 million in cash and
11.5 million shares in Flotek common stock, with the assumption of
$1.3MM of debt and an additional
$5 million earn-out based on
appreciation of Flotek's share price.
JP3's innovative, real-time data platforms combine the energy
industry's only field-deployable, inline optical analyzer with
proprietary cloud visualization and analytics, to radically
increase processing efficiencies and valuation of natural gas,
crude oil and refined fuels. The transaction positions Flotek for
accelerated growth and diversifies the Company's business across
all segments of the hydrocarbon value chain, while enhancing
existing chemistry applications and broadening its customer reach
across the midstream and downstream sectors.
John W. Gibson, Jr., Chairman,
President, and Chief Executive Officer of Flotek stated: "This
market has created such chaos and uncertainty that numerous growth
opportunities – both organic and inorganic – have emerged. We have
been disciplined in vetting those opportunities with a desire to
reduce our dependence on rig count and the US unconventional
market, while establishing an offering in the digital
transformation market. With the acquisition of JP3, we are able to
diversify our revenue stream and better serve our customers amidst
accelerating digital transformation in the energy industry. The
estimated $1 billion addressable
market in the US alone provides significant revenue growth
opportunities.
"Together with JP3, we have a shared vision for being the
platform that optimizes profitability from the reservoir to a
hydrocarbon molecule's final destination. The automation of
real-time analysis of flowing products brings tremendous value to
the midstream energy sector and in the delivery of refined
fuels. The more we know about our hydrocarbons, the more
efficient, clean, safe and profitable we become as an industry,"
continued Gibson.
JP3 President Matt Thomas stated,
"Our outstanding team at JP3 has built a technology platform that
brings significant increases in profitability to over sixty clients
by maximizing the value of their hydrocarbons through our real-time
analysis of flowing products and our cloud-based monitoring
solutions. Flotek's strong liquidity position can fuel growth
opportunities by accelerating our Data-as-a-Service (DaaS) product
offerings and expanding our reach into international
markets. The energy industry is in a state of transformation,
and we look forward to helping companies capture cost savings and
generate higher revenues through the application of our proprietary
technology."
The acquisition offers compelling strategic and financial
benefits for Flotek by:
- Adding high growth business with proven technology platform
that supports digital transformation in the energy
industry;
- Providing clear runway into $1
billion addressable market with significant international
opportunity utilizing Flotek's global reach;
- Building on JP3's strong value proposition for customers, with
the automation of real-time analysis driving increased
profitability for customers even in a weak oil market;
- Opening up significant downstream distribution opportunity
highlighted by the recently-announced joint marketing
agreement between JP3 and Phillips 66;
- Creating opportunity for recurring revenue at high margins by
accelerating JP3's continued transition to a DaaS business
model;
- Diversifying Flotek's business across all segments of the
hydrocarbon value chain, while enhancing existing chemistry
applications and broadening its customer reach across the midstream
and downstream sectors.
In conjunction with the transaction, Flotek will create a new
Analysis & Data division, which will be led by Thomas as Flotek
Executive Vice President, in addition to his continuing role as
President of JP3. Additionally, JP3's Chief Data Officer
James Dixson will serve as Senior
Vice President of the Analysis & Data Division. JP3 will
continue to be headquartered in Austin,
Texas.
As an inducement to join the Company and to closely align
interests with the Company's shareholders, Thomas has been granted
507,000 restricted stock awards (RSAs) that will vest over three
years and performance-based options representing approximately
461,000 shares of the Company that will vest based on achievement
of the closing stock price for the Company's common stock for a 20
consecutive trading-day period, with full vesting at closing prices
at or above $7.00 per share for a 20
consecutive trading-day period. The options have an exercise
price equal to the closing price of the Company's shares on the
date of grant. As a part of the inducement plan, the Company
expects to offer equity – including RSAs and performance-based
options – to other JP3 leaders and employees representing no more
than 815,000 shares of the Company.
As a part of the transaction, the sellers of JP3 have the right
to nominate one member to Flotek's Board of Directors, subject to
approval by the Company's Governance & Nominating
Committee.
Tudor, Pickering, Holt & Co. ("TPH") served as financial
advisor to JP3 related to the transaction.
Conference Call
Flotek and JP3 will hold a conference
call on Tuesday, May 19, 2020, at
9:00 a.m. CT (10:00 a.m. ET) to discuss the transaction and
Flotek's first quarter earnings performance. To participate in
the call, participants should access the webcast on
www.flotekind.com under the Investor Relations section or dial
1-844-835-9986 approximately five minutes prior to the start of the
call. Following the conclusion of the conference call, a recording
of the call will be available on the Company's website.
A slide presentation will be available for download at
www.flotekind.com.
About Flotek
Flotek empowers the energy industry to maximize the value of
their hydrocarbon streams and improve return on invested capital
through data-driven platforms and chemistry technologies. Flotek
serves downstream, midstream and upstream customers, both domestic
and international. Flotek is a publicly traded company
headquartered in Houston, Texas,
and its common shares are traded on the New York Stock Exchange
under the ticker symbol "FTK." For additional information, please
visit Flotek's web site at www.flotekind.com.
About JP3
Headquartered in Austin, Texas,
JP3 Measurement was founded in 2005 and provides the industry's
only field deployable, real time, in-line optical analyzer for both
liquid and natural gas measurement. With analysis points in
every major basin across North
America, JP3 is focused on improving the quality of
hydrocarbon measurement and process control for the oil & gas
industry. For more information, please visit JP3's website at
http://www.jp3.com/.
Forward-Looking Statements
Certain statements set forth in this press release constitute
forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding Flotek Industries, Inc.'s business,
financial condition, results of operations and prospects. Words
such as will, continue, expects, anticipates, intends, plans,
believes, seeks, estimates and similar expressions or variations of
such words are intended to identify forward-looking statements, but
are not the exclusive means of identifying forward-looking
statements in this press release. Although forward-looking
statements in this press release reflect the good faith judgment of
management, such statements can only be based on facts and factors
currently known to management. Consequently, forward-looking
statements are inherently subject to risks and uncertainties, and
actual results and outcomes may differ materially from the results
and outcomes discussed in the forward-looking statements.
Further information about the risks and uncertainties that
may impact the Company are set forth in the Company's most recent
filing with the Securities and Exchange Commission on Form 10-K
(including, without limitation, in the "Risk Factors" section
thereof), and in the Company's other SEC filings and publicly
available documents. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. The Company undertakes no
obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the
date of this press release.
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SOURCE Flotek Industries, Inc.