KLX Energy Services Holdings Profile
KLX Energy Services Holdings, Inc. (KLXE) provides oilfield services to leading onshore oil and natural gas exploration and production companies operating in both conventional and unconventional plays in all of the active major basins throughout the United States.
The company delivers mission critical oilfield services to primarily independent major oil and gas companies focused on drilling, completion, production and intervention activities for technically demanding wells from over 50 service facilities located in the United States. Its primary services include directional drilling, coiled tubing, thru tubing, hydraulic frac rentals, fishing, pressure control, wireline, rig-assisted snubbing, fluid pumping, flowback, testing, pressure pumping and well control services.
The company’s primary rentals and products include hydraulic fracturing stacks, blow out preventers, tubulars, downhole tools, dissolvable plugs, composite plugs and accommodation units. The company operates in three segments on a geographic basis, including the Southwest Region (the Permian Basin and the Eagle Ford), the Rocky Mountains Region (the Bakken, Williston, DJ, Uinta, Powder River, Piceance and Niobrara basins) and the Northeast/Mid-Con Region (the Marcellus and Utica, as well as the Mid-Continent STACK and SCOOP and Haynesville).
The company’s proprietary products and specialized services are supported by technically skilled personnel and a broad portfolio of innovative in-house research and development (R&D), manufacturing, repair and maintenance capabilities. The company works with its customers to provide engineered solutions across the entire lifecycle of the well, by streamlining operations, reducing non-productive time and developing cost-effective solutions and customized tools for its customers’ most challenging service needs, which include technically complex unconventional wells requiring extended reach horizontal laterals with greater completion intensity per well.
Products and Services
The principal high value-added services and related tools and equipment the company offers to support its customers throughout the lifecycle of the well include drilling, completions, production and well intervention services and products in each of its geographic reporting segments.
Drilling: The company provides directional drilling and associated drilling support services, including accommodations packages, to exploration and production (E&P) companies in many of the most active areas of onshore oil and natural gas developments in the United States, including all active U.S. oil and natural gas basins with level 1 facilities in Appalachian Mountain, Gulf Coast, Mid-Continent, West Texas and Rocky Mountain regions.
The company’s drilling activities are consisted of directional drilling services, downhole navigational and rental tools businesses and support services, including well planning, site supervision, accommodation rentals and other drilling rentals, which assist customers in the drilling and placement of complex directional and horizontal wellbores. These directional drilling activities utilize in-house positive pulse and electromagnetic measurement-while-drilling communication options to ensure accurate and timely delivery of data transmission for all real-time drilling applications, as well as logging-while-drilling capabilities.
In addition to navigation, the company’s systems offer various technologies, including gamma ray, azimuthal gamma ray, real-time continuous inclination and azimuth, rotary steerable, pressure-while-drilling, mode shifting, stick-slip and destructive dynamics, dynamic sequencing and real-time shock and vibration modules. KLXE utilizes modern well planning and anti-collision software to assist the company’s well planners in providing accurate real-time information to its customers. Additionally, KLXE offers the company’s K-series mud motor fleet that features a proprietary transmission-mandrel to deliver strong build rates, fights fatigue on extended laterals and is available to service all known well profiles.
As of December 31, 2022, the company’s market share of the U.S. onshore drilling market was 7.4% as measured by the number of rigs it has worked on during the year as a proportion of the total number of rigs published by Baker Hughes. The company intends to continue to re-deploy additional directional drilling capacity into 2023, as market conditions warrant.
Completion: The company’s completions activities are focused on services that help its customers complete and stimulate extended reach horizontal laterals and more technical wellbores. The company is highly experienced in safely servicing deep, high-pressure, high-temperature wells in all of the most active onshore basins in the United States and provides premium perforating services for both wireline and tubing-conveyed applications.
The company’s completions activities include a wide range of services, such as coiled tubing and nitrogen services; wireline services (including pump down perforating, logging and pipe recovery); pressure control products and services; wellhead and hydraulic fracturing rental products and services; flowback and testing services; thru-tubing technologies and services; rig assist snubbing services; cementing products and services; acidizing and pressure pumping services; and downhole completion tools, including toe sleeves; wet shoe cementing bypass subs; composite plugs; dissolvable plugs; liner hangers; stage cementing tools, inflatables, float and casing equipment; and retrievable completion tools.
The company’s coiled tubing units are used in the provision of completion services or in the support of well-servicing and workover applications. The company’s rig-assisted snubbing units are used in conjunction with a workover rig to insert or remove downhole tools or in the support of other well services while maintaining pressure in the well, or in the support of unconventional completions. The company’s nitrogen pumping units provide a non-combustible environment downhole and are used in the support of other pressure control or well-servicing applications. The company also offers highly-technical and specialized well control services, which are typically required in response to emergencies at the well site, requiring a variety of solutions, including freezing, hot tapping and gate valve drilling services, as well as critical well control and containment operations. The company’s team consists of oilfield services veterans with extensive domestic and international experience in well control operations.
As of December 31, 2022, the company had a fleet of 39 coiled tubing units, 23 of which are large diameter coiled tubing units, across its geographical regions.
The company has 77 wireline units in the fleet and 37, or 48%, are configured to run pump down or plug-and-perf operations. The company’s research and development (R&D) organization also enables its operations to support its customers with cutting edge pump down operations that include greaseless wireline, addressable gun systems and addressable release tools, to provide its customers with high quality pump down services. The company also maintains a full line of radial cement bond tools, compensated neutron porosity tools and casing evaluation tools to provide well evaluation services to its clients. The company also utilizes greaseless line and quiet truck wireline technology to meet the environmental concerns of its customers.
The company offers a full line of valves and corresponding services to assist clients with their pressure control needs during hydraulic fracturing operations. These valves are assembled in predetermined configurations based on customer preference and installed on the wellhead to control flow and pressure during hydraulic fracturing operations. The company owns a large, young line of valves serving the North American onshore oil and gas market. The company has enhanced its hydraulic fracturing valve fleet line through the internal development of next generation technology, including its proprietary, patent pending hydraulic fracturing relief valve (FRV).
Additional technologies that the company deploys on behalf of its customers include its patented flotation collar, which assists customers in getting completion casing to the bottom of extended reach wells when friction prevents getting casing to depth, proprietary internal pressure actuated (IPA) toe sleeve, which allows customers a consistent and reliable hydraulic fracturing initiation sleeve at the toe of the completion, composite hydraulic fracturing plug, a flow control device that is set in the wellbore at given intervals to divert fluid into the formation, and dissolvable plugs.
Production: The company also provides services to enhance and maintain oil and gas production throughout the productive lives of its customers’ wells. The company’s production services include maintenance-related intervention services, as well as the provision of specifically required products and equipment. As with its completion and intervention service offerings, the company has developed a portfolio of proprietary tools that differentiates its production solutions service offering. The principal services and equipment the company provides across the production lifecycle of the well include production blow out preventers, mechanical wireline services, slick line services, hydro-testing, premium tubulars and other specialized production tools.
The company’s proprietary production tool portfolio creates a distinct competitive advantage for it in selling its production services. Key downhole production tools that the company has developed and deployed with strong customer adoption include:
Punch Ram Tool—The punch ram tool gives customers the ability to safely and repeatedly release trapped pressure inside production tubulars during pulling operations. The alternative is to hot-tap the tubing, which is a high-risk operation that most operators are not willing to employ.
Hydraulic Fracturing Protect Rod Hang Off Tool—This tool is developed to give customers the ability to hang off a rod string rather than tripping it out of the hole and laying it down. The associated costs of tripping rods out of the hole coupled with the damage of laying them down and picking the string back make this tool an excellent alternative option for customers. The hang off tool allows an operator to easily hang the rod string in the wellhead and still gives them the ability to tie into the tubing, if need be, to monitor pressure or pump fluid.
Intervention: The company’s intervention services consist of best-in-class technicians and equipment that are focused on providing customers engineered solutions to downhole complications. Intervention involves the application of specialized tools and procedures to retrieve lost equipment and remove other obstructions that either interfere with the completion of the well or are causing diminished production. The principal services the company provides to remediate these complications include fishing, thru-tubing and pipe recovery.
The company supports its intervention group with a portfolio of tools consisting of patented and other proprietary technologies. Innovations deployed in the field include its DXD Venturi Tool; HAVOK PDC Bearing Section; Hydraulic By-Pass Tool; and Drill Mate (Mechanical By-Pass Valve).
DXD Venturi Tool—The patent pending DXD (Debris Extraction Device) is an internally developed downhole tool that assists customers in removing unwanted debris from the wellbore. Utilizing fluid dynamics, the tool consists of a jet section that accelerates fluid across a nozzle. This increase in fluid velocity creates a pressure drop inside the tool, which draws fluid through an inlet. As the fluid is drawn into the system through the inlet, it picks up unwanted debris in the fluid flow, which is then caught in a series of chambers installed below the tool. The chambers then carry the debris out of the hole when the system is brought back to surface.
HAVOK PDC Bearing Section—The patented Havok bearing pack is an extremely reliable and robust thru-tubing motor that deploys the industry’s only all PDC (Polycrystalline Diamond Compact) bearing design - meaning no ball bearings. The elegant design greatly reduces the operating cost of the company’s thru-tubing motors and provides it with a significant differentiator in the thru-tubing space.
Hydraulic By-Pass Tool—The patented hydraulic by-pass tool allows the company to run its conventional motor assemblies and achieve substantially higher circulation rates without reducing the expected life of its conventional power section. The additional fluid being pumped and by-passed optimizes the downhole hydraulics for the operation and assists with proper debris removal.
Drill Mate (Mechanical By-Pass Valve)—The patented Drill Mate is a downhole tool that was developed to give customers a way to mechanically by-pass fluid during drill out or clean out operations. The tool is a two-piece system that opens and closes based upon the amount of weight being set on the mill or bit.
Customers and Marketing
Substantially all of the company’s customers are engaged in the energy industry. Most of the company’s sales are to major, large independent and regional oil and natural gas companies, and these sales have resulted in a diversified and geographically balanced portfolio of more than 740 customers within North America.
The company’s sales activities are conducted through a network of sales representatives and business development personnel, which provide coverage on a product-line and geographical basis. Sales representatives work closely with local operations managers to target potential opportunities through strategic focus and planning. Customers are identified as targets based on their drilling and completion activity, geographic location and economic viability. Direction of the sales team is conducted through weekly meetings and daily communication. The company’s marketing activities are performed internally. The company’s strategy is based on building a strong North American brand though multiple media outlets, including its website, select social media accounts, print, billboard advertisements, press releases and various industry-specific conferences, publications and lectures. The company has a technical sales organization with expertise and focuses within their specific service line. The company’s strategy is to sell its services using data to demonstrate safety and service quality. The company accomplishes this through communication across sales regions and operations departments to share best practices and leverage existing customer relationships.
Competition
The company’s major competitors include Schlumberger, Baker Hughes, Halliburton, RPC, Nine Energy Services, Phoenix Technology Services, Scientific Drilling International, NexTier, Liberty Oilfield Services, Ranger Energy Services, ProPetro Holding Corp., and STEP Energy Services.
Government Regulation and Environmental Matters
The company is also subject to laws and regulations, such as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and similar state statutes, governing remediation of contamination.
Some of the existing laws, rules and regulations, as amended from time to time, to which the company is subject include the Resource Conservation and Recovery Act (RCRA) and comparable state statutes; the comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as the Superfund law; the federal Endangered Species Act (ESA) and comparable state laws; and the Migratory Bird Treaty Act (MBTA).
The company is subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act, which establishes requirements to protect the health and safety of workers.
Operating a fleet of over 1,700 vehicles, the company is subject to regulation as a motor carrier by the U.S. Department of Transportation (the DOT) and analogous state agencies, which requires it to comply with a number of federal and state laws and regulations, including the Federal Motor Carrier Safety Regulations and Hazardous Material Regulations for interstate travel, and comparable state regulations for intrastate travel.
History
KLX Energy Services Holdings, Inc. was incorporated in Delaware in 2018.
