Universal Compression, Inc. | More Acquisitions in 2001
More Acquisitions in 2001
Two more companies were acquired in February 2001: Weatherford Global Compression Services, L.P. and ISS Compression, Inc, the parent of IEW Compression, Inc. The purchase of Weatherford International Ltd.'s compression business doubled Universal's size, adding 950,000 horsepower to the fleet, making it the second largest oilfield compression company after Hanover Compressor of Houston. As a result of the deal, Weatherford International gained a 48 percent holding in Universal, worth $412 million, making it Universal's majority shareholder.
Universal paid $15 million cash for IEW, which had revenues of about $19.5 million a year. IEW brought Universal a strong presence in the Gulf of Mexico. Universal paid $707.3 million in stock and assumed debt for the Weatherford unit, which took the company into Canada.
Tulsa, Oklahoma-based KCI Inc. was acquired in July 2001 for $98.7 million in cash, stock, and assumed debt. Universal had previously been focused on the field side of the natural gas business; KCI was much stronger on the pipeline side, reported the Houston Chronicle. July 2001 also saw the purchase of Louisiana Compressor Maintenance Co. Inc. (LCM) and LCM Turbo. Universal paid $25 million for LCM. Technical Compression Services, Inc. was added in October 2001. After Hanover Compressor bought out the Schlumberger natural gas businesses in 2001, Universal and its Houston-area rival together controlled 85 percent of the natural gas compression business, reported the Houston Chronicle.
Universal was affected by something of an industry downturn in 2001 and 2002, due to the Enron scandal and a slow economy. Its services remained in demand, however, even when fewer natural gas rigs were being developed, since older wells required more compressors.
Universal operated the second largest domestic fleet of natural gas compressors. Its 6,900 units totaled two million horsepower. Besides renting compression equipment, Universal had two divisions to fabricate and service it. The fabrication division, which employed about 100 people, was moved from Tulsa to Houston in the spring of 2003. The rental business was divided into domestic and international divisions. These accounted for a little more than half of sales, but 81 percent of gross profit, reported Investor's Business Daily in 2002. Net income rose 32 percent to $33.5 million in the fiscal year ended March 31, 2003, on sales of $625.2 million, up 8 percent.