New Source Energy buys CEO's company for $44 million

HOUSTON Thu Nov 14, 2013 3:35pm EST

Related Topics

HOUSTON (Reuters) - New Source Energy Partners LP (NSLP.N) said on Thursday it has purchased an oilfield services company for $44 million in cash and common units from a group of owners that includes Kristian Kos, its chief executive officer.

New Source Energy, an exploration and production master limited partnership (MLP) based in Oklahoma City, Oklahoma, bought MCE LP for $3.8 million in cash and 1.8 million common units. MCE's former owners are also eligible for additional payout if the company hits certain financial targets.

There have been a number of oilfield deals that benefit executives at the publicly traded companies they run.

In June, SandRidge Energy Inc's (SD.N) board removed CEO Tom Ward after activist investors accused him of self-dealing. An internal investigation at SandRidge found no wrongdoing.

And Gulfport Energy Corp's (GPOR.O) former chairman earned as much as $31 million from selling acreage in Ohio's Utica shale to Gulfport.

New Source acquired MCE LP, a company that specializes in making the drilling and well completion process safer, as part of a strategy to integrate its business and provide growth, CEO Kos said on a call with analysts.

Kos owns about 2 percent of New Source's outstanding units and is the majority owner of New Source's general partner, New Source Energy GP LLC, according to filings with the U.S. Securities and Exchange Commission.

It is not clear how much Kos would benefit from the sale of MCE. He did not provide any details about MCE's customers or revenue when asked by analysts.

"What they do is provide pressure testing and safety measures during the drilling and completion phase to the operators," said Kos. "They've got blue-chip customers."

A spokesman did not immediately respond to questions about Kos' interest in the deal.

The MCE deal, which closed on Wednesday, was unanimously approved by New Source's board of directors, New Source said.

New Source's units were down 2.1 percent at $21.79 on Thursday afternoon on the New York Stock Exchange.

(Editing by Terry Wade and Matthew Lewis)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.