LDC-backed Epi-V in 2.5x exit

Epi-V, which sold i-Tec Well Solutions to trade buyer Trican, hopes to tap the fast-growing shale gas industry with further investments.

Epi-V, a UK-based oil and gas upstream service investor backed by LDC, the buyout arm of Lloyds Bank, has exited i-Tec Well Solutions to Toronto-listed oil and gas services provider Trican.

The cash-and-share deal will bring Epi-V a 2.5x return on its investment, a source told Private Equity International. It values i-Tec, an oilfield equipment and services provider headquartered in Stavanger, Norway, at up to $107.1 million.

Trican will buy all of the shares and discharge existing debt of Petro Tools Holding, the holding company for i-Tec and its subsidiaries, in exchange for an initial $30 million in cash and 2.4 million of its own shares, a statement said. This will be topped by up to $47.1 million if the company meets agreed-upon financial target by the end of the year.

i-Tec, which operates in Norway and the US and Canada, has recently been focusing on making shale gas drilling equipment.

The successful sale of i-Tec is a powerful vindication of Epi-V’s bet on the unconventional gas market, according to Kevin Forbes, a partner at Epi-V. “Over the last 40 years North Sea oil and gas development has provided a global opportunity for UK engineering and innovation – we believe a similar opportunity is available for shale exploration and production.”

He said that the British government’s recent endorsement of shale gas will provide UK unconventional drilling service providers with a huge reservoir for growth in the years to come, with potential markets opening up on both sides of the Atlantic. “The US shale gas market is already maturing and others including the UK will follow suit. Smart investors in shale gas and fracking-related support services can help the industry to grow.”

Epi-V was established in 2007 to invest in emerging technology and service companies within the upstream oil and gas services sectors, and has £50 million under management in the UK, Europe or North America. It is backed by LDC, the buyout arm of Lloyds Bank, which invested £50 million in the fund in August that year.

The firm allocated another £50 million to Epi-V in July 2011.