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C&J Energy cuts cash portion of Nabors unit deal to $688 million
February 9, 2015 / 4:12 PM / 3 years ago

C&J Energy cuts cash portion of Nabors unit deal to $688 million

(Reuters) - Oilfield services provider C&J Energy Services Inc CJES.N cut the cash portion of its offer to buy Nabors Industries Ltd’s (NBR.N) well maintenance business by $250 million after oil prices halved since the deal was announced in June.

The cash-and-stock deal was valued at $2.86 billion when it was announced on June 25.

With the cash component of the offer reduced to $688 million, the deal is now valued at about $1.45 billion based on C&J Energy’s Friday closing price of $12.25, according to Evercore ISI analyst James West.

Up to Friday’s close, C&J Energy’s stock had fallen more than 60 percent since the deal was announced, while Nabors’ stock had fallen about 55 percent.

C&J Energy said in June it had a funding commitment of $1.3 billion from Citigroup to finance the deal and to refinance existing debt. The amount to be borrowed will fall as a result of the lower cash offer, C&J said.

“Our combined company will have more liquidity, lower leverage and a stronger balance sheet, which are critical, especially during a challenging time for our industry”, Chief Executive Josh Comstock said in a statement.

A 50 percent fall in oil prices over the past seven months has prompted oil producers to slash capital spending, squeezing oilfield service providers such as Nabors and C&J Energy.

As part of the deal, Nabors will merge its well maintenance business with C&J Energy.

Nabors will own about 53 percent of the combined company, which will be managed by C&J Energy management.

C&J Energy said the companies were working toward closing the deal in March after a shareholders’ vote.

Reporting by Anannya Pramanick in Bengaluru; Editing by Sriraj Kalluvila and Don Sebastian

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