July 14, 2011 / 10:45 AM / 8 years ago

UPDATE 2-Key Energy to buy services co for $300 mln

* Says will buy Edge Oilfield Services, Summit Oilfield Services

* Says will issue 7.5 million shares, pay about $164 million in cash

* Says deal to add to co’s earnings in 2011 (Adds deal details, industry background, CEO comment 2-5,7)

BANGALORE, July 14 (Reuters) - Oilfield services provider Key Energy Services Inc said it would buy Edge Oilfield Services and Summit Oilfield Services for about $300 million to add to its products used for drilling in unconventional shales.

The deal comes as oil and gas companies look to tap North American shale fields — underground rock formation rich in oil and gas — that require techniques like hydraulic fracturing to crack the resources.

Edge’s entry into the lucrative Eagle Ford shale is underway. This will boost Key Energy’s revenue as many companies have been striking deals to expand in the oil-rich region.

Key Energy said it expects Edge’s business to add to its margins and earnings beginning this year.

“Edge’s high performance frac stack equipment enjoys strong growth opportunities, particularly in unconventional shale markets,” Chief Executive Dick Alario said in a statement.

Edge rents frac stack equipment used to support hydraulic fracturing operations.

Unconventional resources require techniques like hydraulic fracturing operation where, water, sand and chemicals are pumped at very high pressure deep underground to create fissures in shale and other rocks that allow natural gas to escape.

Under the deal, Key Energy will issue 7.5 million shares and pay about $164 million in cash to Edge and Summit. (Reporting by Krishna N Das and Thyagaraju Adinarayan in Bangalore; Editing by Viraj Nair)

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