Blue Wolf Capital Partners LLC has acquired a controlling stake in Petrosmith LLC, an oilfield tubular goods manufacturer. The transaction marks as the first investment from the firm’s latest private equity fund, Blue Wolf Capital Fund IV LP, which closed in September 2017 with $540 million in capital commitments.
Founded in 1983, Petrosmith supplies oilfield tanks, vessels and related tubular goods to the domestic oil and gas industry. The Abilene, Texas-based manufacturer makes a variety of tanks, including: storage tanks, gun barrel tanks, heater treaters, vessel separators and vapor recovery towers. The target also offers plug and abandonment services to energy and petroleum (E&P) businesses in the Permian Basin, Eagle Ford and Mid-Continent region.
Blue Wolf is a New York-based private equity firm that looks to make control investments in middle-market companies. Founded in 2005, PE firm targets companies that service the forest and building products, manufacturing and distribution, energy services, aerospace and defense, and healthcare industries. The firm’s experience with special situations and restructuring has helped Blue Wolf partner with many E&P owners in “today’s highly-volatile, deeply-troubled energy markets.”
“As a result of the decline in both oil and natural gas prices since 2014, the domestic energy industry is experiencing duress not seen since the early 1980s,” according to the private equity firm. “Many companies that are vital to the U.S. energy supply are being forced to restructure, downsize and operate at revenue and margin levels dramatically lower than anything they have experienced in recent history. Companies with strong franchises, unique capabilities, and excellent relationships can, with adequate capital and a good strategic plan, weather this storm and emerge with greater capabilities and market share.”
As part of the current deal, Blue Wolf also gains Petrosmith’s coating facility that services the target’s tank, vessel and OCTG divisions. Financial terms of the Petrosmith transaction was not disclosed. The firm’s energy services portfolio includes Extreme Plastics Plus, an environmental containment company providing above ground storage tanks and drilling support services.
AE Industrial, Energy Capital Partners and Ridgemont Equity have also shown a regained interest in the energy markets. In November 2017, Ridgemont raised $320 million in a companion fund to invest side-by-side in energy deals with the firm’s flagship fund. Energy Capital Partners agreed to buy U.S. power generator Calpine Corp. (NYSE: CPN) for $5.6 billion in August 2017. Meanwhile, AE Industrial acquired BHI Energy in the same month.