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Blackstone Energy to acquire Fort Worth drill bit, downhole tool company

Blackstone Energy Partners announced Oct. 23 it has agreed to acquire a controlling, majority interest in Fort Worth Ulterra Drilling Technologies, a manufacturer of drill bits and downhole tools for the oil and gas industry.

Fort Worth-based Ulterra Drilling Technologies is being acquired by Blackstone from affiliates of American Securities LLC. American Securities and certain members of management will retain a minority equity interest in the company going forward. Financial terms were not disclosed. The transaction is expected to close prior to year-end 2018.

Ulterra is the largest pure-play, independent supplier of polycrystalline diamond compact drill bits to the oil and gas industry. The company is one of the fastest growing PDC drill bit manufacturers, having more than doubled total revenue since 2016. Ulterra currently has a leading position in many of the most active U.S. onshore oil and gas basins, including the Permian and Eagle Ford, and has a growing presence internationally. Ulterra’s singular focus on PDC drilling technology allows it to deliver the highest level of customer service and customization to producers across a wide range of basins and geological formations, driving industry leading performance and durability.

The company is led by a management team who will continue in their current roles going forward, including Chief Executive Officer, John Clunan, and Chief Financial Officer, Maria Mejia. Ulterra has a workforce of more than 600 employees worldwide. The company has nearly 250,000 square feet of engineering, manufacturing and service space in Fort Worth, Leduc, Alberta in Canada and global locations in Oman, Colombia, Argentina, Kurdistan, and is soon to open in Saudi Arabia.

“We are very excited about having Blackstone as a partner as we enter the next phase of growth. Blackstone’s in-depth knowledge of the energy markets through their upstream and midstream companies will provide valuable insight for Ulterra. We are also excited to have American Securities continue their involvement with the company. This new team will enable the continued expansion for our people, our culture, and our partners,” said Clunan.

“Drill bits are a mission-critical downhole consumable product, which are poised to benefit from drilling activity, particularly in the most economic oil and gas plays in North America. Ulterra is well-positioned to serve producers in these plays given its portfolio of premium PDC drill bits that deliver best-in-class performance and reliability. We look forward to partnering with American Securities and the Ulterra team as the Company enters this next phase of growth. We believe that high-quality equipment manufacturers such as Ulterra will continue to represent attractive investment opportunities, including potential add-on acquisitions for Ulterra, or new standalone opportunities in oil field services and equipment,” said Eric Liaw, Senior Managing Director of Blackstone Energy Partners.

“During our partnership, John and the talented Ulterra management team have established Ulterra as a market leader through their best-in-class products and focus on customer service,” said Kevin Penn, a Managing Director of American Securities. “We continue to believe in Ulterra and are excited to remain equity holders in the Company alongside the management team and Blackstone to pursue Ulterra’s next phase of growth,” added Michael Sand, a Managing Director of American Securities.

Kirkland & Ellis served as legal counsel to Blackstone. Barclays served as financial advisor to Blackstone. Simmons & Company International, Energy Specialists of Piper Jaffray and Wells Fargo Securities, LLC acted as financial advisors to American Securities and Ulterra. Weil Gotshal & Manges LLP acted as legal counsel to American Securities and Ulterra.

www.ulterra.com

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