U.S. Well Services, Inc. announced an expansion of its borrowing capacity with the addition of a $75 million second lien delayed draw credit facility provided by Piper Jaffray Finance, LLC and an amendment to its existing first lien credit facility. The company will have access to up to $140 million of liquidity under its credit facilities, which will help manage the growth associated with the company’s electric frac fleet rollout.
As previously announced, USWS expects to deploy three of its next generation proprietary newbuild electric frac spreads in the first half of 2019 under term contracts. Contract discussions continue to advance with additional potential and current customers, and USWS plans to assemble new fleets as contracts are awarded. USWS has secured the long-lead lead items required to successfully deploy additional new build electric frac fleets in 2019, beyond the three currently under construction.
Business Update and Outlook
USWS recently completed a strategic realignment by relocating several fleets from the northeast to the Permian basin and Eagle Ford trend to better match current customer demand. Primarily as a result of the company’s strategic realignment and the slow-down of completion activity in North America, USWS expects its full year 2018 Adjusted EBITDA1 to be 10% to 15% below its most previously provided guidance range.
In 2019, USWS expects average Adjusted EBITDA per fleet of $15.0 to 16.0 million1 with an average of 13 to 14 fleets deployed. Over 90% of the company’s projected 2019 Adjusted EBITDA is either contracted or committed. USWS expects to begin operating three of its proprietary newbuild electric frac fleets under contract in the first half of the year. Three fleets are expected to be working in the northeast in 2019.
“Securing this incremental financing is a key piece of USWS’ strategic plan to maintain sufficient liquidity and financial flexibility as we continue the deployment of our contracted newbuild electric fleets to meet rising customer demand,” commented Kyle O’Neill, Chief Financial Officer. “The strategic realignment of our fleets improves our ability to meet customer demand in the most active markets. We are excited about signing our recent newbuild electric frac fleet contract with Apache in the Permian basin, which we announced last week.”
The second lien credit facility and the amended first lien credit facility mature May 31, 2020 and contain typical financial ratio covenants. The company will file full descriptions of the amendment to the first lien credit agreement and the second lien credit agreement with the Securities and Exchange Commission on a Current Report on Form 8-K.
Piper Jaffray Finance, LLC is a wholly owned subsidiary of Piper Jaffray Companies (NYSE – PJC) that provides middle-market loans of between $75 million and $350 million to Piper Jaffray clients.