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Intervale Capital exits Ulterra Drilling Technologies for $325m

14 Aug 2012

Oilfield services-focused private equity firm Intervale Capital has sold Ulterra Drilling Technologies to Esco Corporation for $325m.

Headquartered in Fort Worth, Texas, Ulterra manufactures and rents drilling tools for use in the major oil and gas basins in the US. It also has a growing international footprint with operations in Canada, Latin America, the Middle East and North Africa.

Intervale invested in Ulterra at the time of the company’s acquisition of Canada-based United Diamond in December 2007. From May 2005 to December 2007, Ulterra was controlled by one of Intervale’s predecessor entities, Cherington Capital. Intervale and Ulterra recruited an management team of drill bit specialists, including current president & CEO Johnny Everett, who joined the company in 2005.

Between 2005 and 2012, the company grew revenues from $46m to $188m, representing a 22 per cent compounded annual growth rate. It also expanded its operations from a regional bit company focused exclusively on North Texas to a player of national scale with operations in the Permian Basin, Bakken Shale, Eagle Ford Shale, Haynesville Shale, Marcellus Shale, Rocky Mountains, Fayetteville Shale, Granite Wash, and Mississippi Lime. Over that time period, Ulterra expanded its manufacturing capacity in Fort Worth.

Charles Cherington, managing partner at Intervale Capital, said, “We are very happy to turn Ulterra over to Esco, a well-regarded and growing industry partner, and to achieve an attractive return for our investors. We have the highest respect for Johnny Everett and the rest of the Ulterra management team. Management worked alongside Intervale to transform Ulterra from a regional, roller cone-focused drill bit player into the fastest growing PDC bit manufacturer in the world.”

The Ulterra sale is the second exit from Intervale’s first fund, which closed on $280m in 2008. Intervale is actively investing out of its second fund, through which it acquired oilfield cementing specialist Allied Oil and Gas Services in December 2011.

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