2016 04 16: How fast the greedy frac’ers fall: Privately held Sanjel broken up and sold to rivals, will only recover fraction of what it owes lenders
Buyer to close Sanjel’s Calgary headquarters due to ‘miserable’ demand by Dan Healing, The Canadian Press, May 18, 2016, Calgary Herald
The head of the firm buying Sanjel Corp., Canada’s largest privately held well-fracking company, says the target company’s headquarters in Calgary will be shuttered when the deal closes later this month as a result of “miserable” demand for its oilfield services.
Regan Davis, president and CEO of Step Energy Services, also said reports from two Sanjel employees that all but a handful of staff are losing their jobs are “comically inaccurate,” but refused to give actual workforce numbers or say how many Sanjel staff will be offered Step jobs.
“We’ve been hiring some. We’re hopeful we will be able hire some more. But at this point we just don’t have a whole bunch of clarity on that,” Davis said in an interview this week.
The office workers, speaking on condition of anonymity, said they had been told their jobs would end May 31, adding most of their co-workers had also been told they would no longer be needed.
Sanjel said in court documents last month that it had trimmed its workforce in Canada and the United States from 4,300 to 2,200 since the end of 2014 as low oil prices and shrinking client spending plans cut deeply into revenue. It’s unclear how many of those staff worked in Canada.
“It’s probably worth reiterating that this was an asset transaction to begin with,” said Davis. “So it was never a transaction where we were buying the company; we were buying the assets of the company.”
Davis said there are no plans to increase the size of Step’s Calgary offices after the Sanjel deal closes.
However, Sanjel’s oilfield cementing operations are being spun off into a separate company that will need to find office and shop space and hire staff, he said.
More than 100,000 people are estimated to have lost their jobs in the Canadian oilpatch over the last two years as prices have plunged due to a glut of North American oil and gas — attributed in part to higher production from fracked wells. [Mainly because of the oil and gas industry’s greed and too many law violations by its fraudulent, law violating regulators?]
Sanjel announced in early April it would enter court protection from creditors while negotiating the sale of its Canadian oilfield services assets to Step and similar assets in the United States to Denver-based Liberty Oilfield Services.
No financial details were given initially but a subsequent court filing by Sanjel revealed the total expected return was between $325 million and $375 million, less than the $397 million owed to its secured lending syndicate led by ATB Financial. That makes any recovery unlikely for unsecured suppliers and bondholders owed about $400 million.
Sanjel leases most of its office and shop space from MacBain Properties. The firm is owned by the MacDonald family that also owns Sanjel but was not included in the Step purchase. Don MacDonald founded Sanjel in 1982.
Sanjel was among the largest five providers of pressure pumping services operating in Canada. Their crews inject liquids and sand under high pressure into underground formations to break up the rock and allow trapped oil and gas to flow into the well.
Step is a private company created in 2011 with the backing of Calgary energy investment firm ARC Financial Corp. [Emphasis added]