Quality Distribution Inc. on Monday, May 7, announced that certain of its wholly-owned subsidiaries have entered into definitive agreements to acquire the operating assets of Wylie Bice Trucking and the operating assets and rights of RM Resources for an aggregate purchase price of $79.3 million, plus potential additional consideration of $19.0 million, if certain future operating and financial performance criteria are satisfied. The transactions are expected to close by the end of the second quarter, subject to customary closing conditions.
Headquartered in Killdeer, N.D., Bice is a provider of transportation services to the unconventional oil and gas industry within the Bakken shale region, primarily hauling fresh water, flowback and production water, and oil for numerous energy customers. The flowback and production water Bice hauls primarily is disposed of utilizing four existing saltwater injection wells owned and operated by RM.
“The acquisition of Bice and RM represents the single-most significant step in expanding and diversifying our energy logistics business,” said Gary Enzor, chief executive officer of Tampa, Fla.-based Quality. “The Bice and RM operations are top-tier transportation and disposal well providers in the fast-growing Bakken shale region, and we are confident that we can build on their already solid platform.”
Enzor said the transaction also supports Quality’s strategy to broaden its reach into key oil-rich shales. “When we combine this Bakken acquisition with our existing Eagle Ford shale presence, Quality’s energy logistics business will be more diversified and balanced between oil producing fields and our predominantly gas producing presence in the Marcellus shale,” he said. “We are confident these transactions will further strengthen our customer offering, as we are fast becoming a water and oil hauling logistics solutions provider across multiple shales on a more national scale.”
On a combined basis for its most recent fiscal year ended Dec. 31, 2011, Bice and RM had revenues of about $106.0 million. “Bice and RM have grown rapidly over the last several years, and we are excited about their prospects heading into their peak season,” Enzor said.
Wylie C. Bice, president of Bice, described Quality as “an ideal partner for us. We are excited about joining the team. Opportunities in the Bakken shale continue to grow, and combining with Quality provides us with access to growth capital and enables us to leverage their capabilities to capitalize on this dynamic market.”
Bice operates two trucking terminals in North Dakota, utilizing about 500 drivers, mostly owner-operators. RM has four existing disposal wells and is expected to add another well prior to the anticipated closing of the acquisitions; RM is required to deliver a sixth well within six months of the anticipated closing date, adding significant disposal capacity.
Also on Monday, May 7, Quality reported net income of $6.7 million for the first quarter ended March 31 compared to net income of $2.7 million in the first quarter ended March 31, 2011, driven by higher operating income resulting from increased energy logistics revenue and profitability, enhanced earnings from Boasso America Corp.’s intermodal business and lower overall insurance costs. Total revenue was $191.9 million, an increase of 7.9 percent.
“I am pleased with the company’s growth in earnings this quarter, especially with the progress we have made entering the energy markets,” Enzor said. “We are making tangible progress in improving our chemical logistics driver counts and continue to see solid performance from our intermodal and energy logistics businesses.”