Intervale invests in Tejas Research & Engineering

The transaction marks the firm’s fourth investment in the mid-market oilfield services sector and was made from its recently closed $280m debut fund.

Intervale Capital has invested in Tejas Research & Engineering, a Texas-based oil and gas well completion equipment and services business, as part of a recapitalisation deal. Terms of the transaction were not disclosed.

Tejas is a 30-person company that provides design, engineering and testing services to the oil and gas well completion segment of the oilfield services market.

Though the company’s financials were not disclosed, Intervale typically targets companies with $5 million to $30 million in trailing EBITDA for platform investments such as Tejas.

The transaction, made in partnership with existing management, marked Intervale’s first investment in Tejas but its fourth in the mid-market oilfield services segment – the fund’s sole focus. Intervale previously acquired Ulterra Drilling Technologies, a drill bit manufacturer, in December 2007, followed by AESI Holdings, a manufacturer of wellheads and related drilling equipment, and Casedhole Solutions, a wireline services provider.

To date, all of Intervale’s transactions have been funded out of its debut $280 million (€179 million) fund, which closed in June and is expected to give it $500 million in purchasing power.

Charles Cherington, a managing partner at Intervale, told PEO in June that the firm expects to make six to eight platform investments out of its initial fund, with typical equity cheques of around $25 million.

Tejas’ CEO, Thomas Hill, said in a statement the company plans to use Intervale’s investment to grow its core business and expand its product lines.

Intervale is not alone focusing its investments on oilfield services companies. Rising oil prices have brought with them increasing interest in this sector from private equity investors. Houston-based SCF Partners’ current portfolio includes 12 portfolio companies in the sector, of which six were 2007 investments. And Intervale itself was the product of two private equity funds focused exclusively on this segment: Cherington’s Cherington Capital and co-founder Curtis Huff’s Freebird Partners.