Fairness Opinion
Flotek Industries
M&A Advisory
Amended Supply Agreement With
Transaction Details
- On February 16, 2022, Flotek Industries Inc. (“Flotek" or the "Company") (NYSE: FTK) entered into an agreement with ProFrac Holdings, LLC (“ProFrac”) to amend a previously-announced chemical supply agreement with a ProFrac affiliate.
- The amendment provides that the term of the supply agreement will be extended to ten years, and ProFrac’s minimum purchase obligation for each year will be increased to the greater of (a) a baseline determined by reference to ProFrac’s first 30 hydraulic fracturing fleets deployed and (b) 70% of ProFrac’s requirements.
- As consideration for the amendment, the agreement provides that the Company will issue $50 million principal amount of 10% Convertible PIK Notes to ProFrac and grant ProFrac the right to nominate two members of the Company’s board (in addition to the two members ProFrac is entitled to nominate under the original supply agreement, for a total of four out of seven Flotek directors). Upon closing of the transaction, ProFrac would own up to ~48% of Flotek common stock on an as-converted basis.
- Closing of the transaction is subject to a vote of FTK shareholders and other customary conditions.
About the company
Flotek Industries Inc.
Flotek Industries, Inc. creates solutions to reduce the environmental impact of energy on air, water, land and people. A technology-driven, specialty green chemistry and data company, Flotek helps customers across industrial, commercial, and consumer markets improve their Environmental, Social, and Governance performance. Flotek’s Chemistry Technologies segment provides sustainable, optimized chemistry solutions that maximize its customers’ value by elevating their ESG performance, lowering operational costs, and delivering improved return on invested capital. The Company’s proprietary green chemistries, specialty chemistries, logistics, and technology services enable its customers to pursue improved efficiencies and performance throughout the life cycle of its desired chemical applications program. Major integrated oil and gas companies, oilfield services companies, independent oil and gas companies, national and state-owned oil companies, geothermal energy companies, solar energy companies and advanced alternative energy companies benefit from best-in-class technology, field operations, and continuous improvement exercises that go beyond existing sustainability practices. 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 www.flotekind.com.
ProFrac Holdings
ProFrac is a growth-oriented, vertically integrated and innovation-driven energy services company providing hydraulic fracturing, completion services and other complementary products and services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American unconventional oil and natural gas resources. Founded in 2016, ProFrac was built to be the go-to service provider for E&P companies’ most demanding hydraulic fracturing needs. ProFrac is focused on employing new technologies to significantly reduce “greenhouse gas” (“GHG”) emissions and increase efficiency in what has historically been an emissions-intensive component of the unconventional E&P development process. For more information, please visit https://profrac.com/.
Sources: Company filings.
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