AN INTERVIEW WITH DAN EBERHART, CEO of FRONTIER ENERGY GROUP LLC
EDITOR'S NOTE: Denver, Colorado-based Frontier Energy Group LLC announced Jan. 15 that it has successfully acquired Oklahoma City, Oklahoma-based Canary Wellhead Equipment Inc. The combined companies will be headquartered in Denver and will operate under the name Canary LLC. The company's CEO, Dan Eberhart, recently discussed the acquisition with OGFJ.
OIL & GAS FINANCIAL JOURNAL: While terms of the deal have not been released, it has been reported that Frontier Energy paid less than $100 million for the acquisition of Canary Wellhead. What other details can you mention regarding this transaction?
DAN EBERHART: I can say that we were able to make this acquisition happen with no additional equity, but with debt financing and cash generated from operations.
OGFJ: The acquisition of Canary Wellhead was Frontier Energy's eighth acquisition in four years. What were the earlier acquisitions?
EBERHART: Frontier acquired Frontier Wellhead & Supply Co. and Kodiak Stack Testing Company in 2009; Cable Inc., Western Wellhead Grand Junction, and Hanson Hot Oil in 2010; Luft Machine & Supply Co. in 2011; and Spicer Wireline Inc. in 2012.
OGFJ: With all these acquisitions, Frontier Energy appears to be growing at a rapid pace. Why did Frontier Energy decide to take on the name of this latest acquired company?
EBERHART: Canary Wellhead was an older company than Frontier, and it had always had a great reputation in the industry, along with very positive name recognition. And, while Frontier Energy mainly served the Western US states, Canary Wellhead was in every major shale play, but the Bakken. As Canary LLC, we have more than $100 million in revenue and an obviously wider sales area, which puts us in a much stronger market position.
OGFJ: Creating Canary LLC through this multimillion-dollar acquisition reportedly provides you with a customer base of approximately 900 customers, including Hess, ExxonMobil, Chevron and ConocoPhillips.
EBERHART: The acquisition doubled our customer base, making us the sixth largest wellhead company in the US – and the largest independent wellhead company in the nation – with almost 10% of the rig count.
OGFJ: The combined companies represent more than 50 years of industry expertise, and the new company offers nationwide services, with international operations probably not too far off in the future.
EBERHART: Yes, the new Canary LLC is able to compete with the biggest multinationals. We're still a mid-sized company, but that plays to our advantage. Today, mid-sized players are almost nonexistent in the wellhead space due to recent mergers and acquisitions. With all the consolidations in the wellhead industry, E&P companies have to deal with either the giant companies or the small companies. There's no one else in that middle market now, which puts us in a unique position.
OGFJ: What are some of the services that Canary LLC offers?
EBERHART: As I've mentioned, Canary is sixth in the US for wellhead services, and we are also fifth in the country for frac tree rentals. We have in-house design and build capabilities, with a fabrication and manufacturing shop dedicated to building custom oilfield equipment as well. Our integrated approach provides high-quality wellhead and rental equipment and services. We also have pressure testing services that help our customers complete their wells on time and on budget. We offer full-service, turnkey packages to our customers for all their drilling and production needs.
OGFJ: Has this acquisition been a smooth transition for both companies?
EBERHART: Yes, it's been a win/win situation for everyone involved. As the largest independent wellhead oilfield services company in the market, we plan to operate in an increasing geographic footprint, including every major shale oil and gas region in the US, and to continue providing our customers with exceptional service quality.
Dan Eberhart is CEO of Canary LLC, one of the largest privately held oilfield services companies in the US. He was also CEO of Frontier Energy Group LLC, from January 2009 to January 2013. His career has also included roles as vice president of Greene's Energy Group LLC, and as vice president of Robson Energy LLC. He graduated from Vanderbilt University cum laude with a bachelor's degree in economics and political science, and also holds a juris doctorate from Tulane Law School.