Riverstone Is Planning $900 Million Sale of Abaco Energy

(Bloomberg) -- Riverstone Holdings LLC is preparing to sell oilfield services equipment company Abaco Energy Technologies, which could fetch about $900 million, according to people with knowledge of the matter.

The private equity firm is working with an adviser to run an auction for the Houston-based company, said the people, who asked to not be identified because they weren’t authorized to speak publicly. Abaco is drawing interest from other private equity firms, they said.

A representative for Riverstone declined to comment while representatives for Abaco didn’t respond to requests for comment.

Abaco makes, designs and services parts used for powering so-called mud motors, the section of an oil and gas well drilling system that rotates the drill bit far underground.

Riverstone committed to invest $200 million in the company when it was founded in 2013 with the goal of acquiring energy manufacturing and services businesses, according to a press release at the time. Abaco agreed to acquire drilling-equipment maker Basin Tools Inc. a year later, according to a statement.

Abaco Chief Executive Officer Ken Babcock previously worked for Titan Specialties Ltd. and International Logging Inc., two other companies that Riverstone previously owned.

Abaco should benefit from increased demand over the next 18 months from oil and gas explorers, according to a research note this week from Moody’s Investors Service Inc., which upgraded its credit rating.

While the company has a small revenue base, it is "competitively positioned within its niche market," Moody’s said.

Riverstone, which has offices in New York, London, Houston and Mexico City, has raised $38 billion for energy investments since it was founded in 2000 by David M. Leuschen and Pierre F. Lapeyre Jr., according to its website.

The firm raised $4.2 billion for its most recent buyout fund, which closed in 2015, according to data compiled by Bloomberg.

To contact the reporter on this story: Kiel Porter in New York at kporter17@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Matthew Monks, Michael Hytha

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