Company Enters $4 Billion Downhole Tool Rental Market
Houston, TX, Oct. 01, 2018 (GLOBE NEWSWIRE) — via NEWMEDIAWIRE — SMG Industries, Inc. (the “Company”) (OTCQB: SMGI), an oilfield services company headquartered in Houston, Texas focused in selling products and services to drilling rig operators and E&P companies, today announced the acquisition of a large inventory of bottom hole assembly (BHA) tools rented by directional drilling companies used in their operations.
- A large inventory of 850 downhole oil tools rented to directional drilling companies, expanding the base of customers and service offering,
- Purchase price of $1 million by issuing 1 million common shares of SMGI stock valued in the agreement at $1.00 per share,
- SMGI anticipates positive cash flow from this rental inventory in Q4, 2018, and,
- SMGI eyes other immediately accretive acquisitions.
The inventory of more than 850 tools consists of stabilizers, crossovers, drilling jars, roller reamers and bit subs, including both non-mag and steel units, rented to drilling companies. Directional drilling companies serve as drilling consultants to E&P operators and are paid for their extensive knowledge of landing intricate laterals. These drillers rent BHA oil tools given customer requirements with techniques to complete the lateral sections. Drilling programs become more efficient for directional companies by not carrying the costs and overhead of multiple toolswhich creates an industry segment of downhole rental tool companies.
The downhole tools market is expected to grow from an estimated $3.53 Billion in 2014 to $4.49 Billion by 2020, at a CAGR of 4.9% from 2014 to 2019, according to a recent published MarketsandMarkets report.
Mr. Matt Flemming, CEO of SMGI, stated: “The Company’s expansion into the BHA downhole oil tool rental market through this stock-for-assets acquisition fits directly with our growth strategy. SMGI’s assets and equity will increase in connection with this transaction as the Company anticipates generating a positive cash flow from this rental tool inventory starting in the fourth quarter 2018.” Mr. Flemming continued, “SMGI is actively pursuing additional cash flow positive and accretive acquisitions.”
The Company issued one million shares of its restricted common stock, valued in the agreement at $1.00 per share, for the purchase of this oil tool inventory located in Houston. After the issuance of the shares in connection with this transaction, the Company has 11,316,690 shares of common stock outstanding.
About SMG Industries, Inc.: SMGI is an oilfield services company that operates throughout Texas. The Company, through its wholly-owned subsidiary MG Cleaners LLC, is focused on selling proprietary branded products including detergents, surfactants and degreasers (such as Miracle Blue®) to oilfield drilling rig contractors and E&P companies. MG Cleaners also sells equipment, parts and has service crews that perform on-site repairs, maintenance and drilling rig wash services for customers such as Nabors Industries, Patterson-UTI, Helmrich & Payne, Cactus Drilling and others. SMGI’s newly acquired oil tool inventory is focused on directional drillers that rent downhole assembly tools. SMG Industries, Inc.’s headquarters are located in Houston, Texas with facilities in Odessa, Carthage and Alice, Texas. Read more at www.smg.wordkeeper.netand www.mgcleanersllc.com.
Matthew Flemming SMG Industries, Inc. 1-713-821-3153