AppId is over the quota
* Combination will create a diversified mid-cap oilfield services co
* Superior to pay 0.945 shares and $7 cash, a 61 pct premium
* To add to Superior's EPS and cash flow per share in 2012
* Combined entity will retain the name Superior
* Superior shares down 18 pct, Complete up 36 pct
By Vaishnavi Bala
Oct 10 (Reuters) - Superior Energy Services Inc is to buy smaller rival Complete Production Services Inc in a cash-and-stock deal for about $2.6 billion, its largest, as the oilfield services company looks to bulk up its pressure pumping business.
Helped by continued advances in fracking -- where sand and chemical-laden water is pumped into wells to retrieve oil -- shale oil output has grown from negligible a few years ago to about 700,000 barrels-per-day in June, according to industry estimates.
"I am particularly excited about the pressure pumping fleet that Complete has built out ... It's a fleet that will exceed 670 hp (horse power) by the end of 2012," Superior Chief Executive David Dunlap said on a conference call with analysts.
The company expects its North American customers to continue to migrate to oil and liquids-rich activities.
The New Orleans-based company said pressure pumping would have been about 25 percent of proforma North American land revenue for the year to end-June.
"The deal makes strategic sense for Superior ... (It gives Superior) increased scale in North America, which the company needs," Stephens Inc analyst Michael Marino said, adding that Complete's pressure pumping services and coil tubing services lines are attractive to Superior.
Complete Production, which has a market value $1.61 billion, has focused its business on building its presence around hydraulic fracturing in some of the most active drilling basins in North America, including the Haynesville, Marcellus, Bakken, Fayetteville, Woodford and Barnett shales.
"Superior will get operating scale, customer relationship improvement and the ability to service customers in a more efficient manner," Tudor Pickering & Co analyst Joe Hill said.
Superior Energy shares were trading down 18 percent, while Complete shares were up 33 percent on Monday on the New York Stock Exchange.
REASONABLY PRICED?
Analysts said the deal was fairly priced as the pressure pumping service line is one of the biggest for an oilfield services company.
On completion, Superior and Complete stockholders are expected to own about 52 percent and 48 percent, respectively, of Superior's outstanding shares.
Superior said it expects the deal to add to earnings and cash flow per share in 2012, excluding transaction and integration costs.
Superior will pay 0.945 shares and $7 in cash for each Complete share -- or $32.90 per share, a 61 premium to its Friday close.
Greenhill & Co is advising Superior. JP Morgan, which was also a financial adviser, has provided a bridge financing commitment with respect to the deal's cash portion.
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