The new entity will boast a strong balance sheet. Credit: Haizhen Du/Shutterstock.com.

Dril-Quip, a provider of engineered offshore and onshore oil and gas equipment and services, has signed a definitive merger agreement with Innovex Downhole Solutions, a provider of mission-critical technologies for the oil and gas industry.

The all-stock transaction will establish an energy industrial platform, which will combine the two companies’ complementary product portfolios, service quality, global infrastructures and customer relationships.

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Upon completion, Dril-Quip stockholders will own approximately 52% of the new entity while Innovex stockholders will have a 48% stake, on a fully diluted basis.

The combined company will offer solutions for both onshore and offshore applications. It is projected to have more than $1bn in annual revenue and $221m in adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), including synergies, for fiscal 2023.

Furthermore, the new entity will boast a strong balance sheet, with a pro forma year-end 2023 net cash position of $99m.

Innovex CEO Adam Anderson will lead the new company as CEO and join its board of directors.

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Innovex is majority owned by funds affiliated with Amberjack Capital Partners, which will hold approximately 43% of Innovex International, the new company name post-merger.

The common stock of the combined company will trade on the New York Stock Exchange while Dril-Quip’s offshore products will retain their brand names.

Anderson said: “We are bringing together the great traditions and capabilities of Dril-Quip with Innovex’s proven operating model. By empowering the combined organization using Innovex’s collaborative ‘No Barriers’ culture, we will unleash the capabilities of the combined company to create a unique energy industrial platform with durable margins, low capital intensity and the potential for superior returns on capital throughout industry cycles.”

Subject to regulatory approval and Dril-Quip stockholder approval, the transaction is expected to close in the third quarter of 2024.

Dril-Quip president and CEO Jeffrey Bird said: “The multi-decade legacy and strong reputation of Dril-Quip’s technology, brand and expertise, paired with the customer-centric, innovative and execution-oriented cultures of both companies, will help us continue to manufacture and deliver innovative products and service to our customers and create opportunities for our employees.”

In November 2023, Dril-Quip was selected as a supplier of drill-through systems for Brazilian company Petrobras’ pre-salt development wells.